The Dutch Disease and Economic Diversification: Should the Approach by Developing Countries Be Different?



An important challenge facing resource-rich developed and developing economies is how to avoid the so-called resource curse, characterised by lower economic growth compared to resource-poor economies. Often viewed as synonymous with the Dutch disease effect, this is only one mechanism through which the resource curse can operate. This chapter reviews the resource curse literature (both theoretical and empirical), outlines the Dutch disease effect and its transmission mechanism using the seminal contribution of Corden and Neary (Economic Journal, 92(368), pp. 825–848, 1982), identifies the implications of resource production for long-run economic development and discusses the role of government and policies to reduce potential adverse impacts from the Dutch disease. A developing economy context is emphasised in this chapter.


Resource curse Dutch disease Competitiveness De-industrialisation Economic growth Empirical evidence Policy responses 


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© The Author(s) 2019

Authors and Affiliations

  1. 1.School of Accounting, Economics & FinanceUniversity of WollongongWollongongAustralia

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