Avoiding the Dutch Disease: A Comparative Study of Three Successful Countries

INDONESIA ON THE RISE: INSTITUTIONAL INVESTOR-INTERNATIONAL EDITION, Allen T. Cheng, 2009

ARE DIAMONDS FOREVER? USING THE PERMANENT INCOME HYPOTHESIS TO ANALYZE BOTSWANA'S RELIANCE ON DIAMOND REVENUE, Oliver Basdevant, 2008

IMF Working Paper No. WP/08/80

7 Pages Posted: 18 Dec 2012

See all articles by Sarvar Gurbanov

Sarvar Gurbanov

affiliation not provided to SSRN

Edward Thomas Merkel

Troy University

Date Written: June 01, 2010

Abstract

This paper explores whether natural resource abundance is a precondition for poor economic performance or can be avoided with suitable policy responses. To ascertain the proper remedy package, three countries are examined: Norway, Indonesia and Botswana. Dutch Disease theory focuses on unbalanced growth among the booming goods, the non-booming traded goods and the expanding non-traded goods sectors. When huge amounts of foreign exchange revenues start to flow into a country, persistence on prudent economic policies are relaxed. This paper attempts to analyze countries that resisted the attractiveness of booming sector revenues and conclude with policy suggestions for resource-rich countries.

Keywords: Dutch disease, Norway, Indonesia, Botswana, resource boom

JEL Classification: P28, Q01, Q32

Suggested Citation

Gurbanov, Sarvar and Merkel, Edward Thomas, Avoiding the Dutch Disease: A Comparative Study of Three Successful Countries (June 01, 2010). INDONESIA ON THE RISE: INSTITUTIONAL INVESTOR-INTERNATIONAL EDITION, Allen T. Cheng, 2009; ARE DIAMONDS FOREVER? USING THE PERMANENT INCOME HYPOTHESIS TO ANALYZE BOTSWANA'S RELIANCE ON DIAMOND REVENUE, Oliver Basdevant, 2008; IMF Working Paper No. WP/08/80 . Available at SSRN: https://ssrn.com/abstract=2190232

Sarvar Gurbanov (Contact Author)

affiliation not provided to SSRN

Edward Thomas Merkel

Troy University ( email )

Troy, AL
United States

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