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

Authors

Charles Harvie, University of WollongongFollow

RIS ID

136627

Publication Details

Harvie, C. (2019). The Dutch Disease and Economic Diversification: Should the Approach by Developing Countries Be Different?. In K. Jayanthakumaran, N. Shukla, C. Harvie & O. Erdenetsogt (Eds.), Trade Logistics in Landlocked and Resource Cursed Asian Countries (pp. 9-45). Singapore: Palgrave Macmillan. https://www.palgrave.com/gp/book/9789811368134

Abstract

It might be intuitively expected that resource-abundant countries possess economic advantages (other conditions being similar) over resource-poor countries that enables them to achieve faster economic growth. This expectation has, however, been widely questioned in the literature, with empirical evidence suggesting that resource-abundant countries achieve slower economic growth compared to less resource-abundant countries over the long term. For example, between 1960 and 1990, the per capita incomes of resource-poor countries grew 2-3 times faster than the per capita income of resource-abundant countries, and the gap in growth rates appears to have widened over time (see Sachs and Warner, 1999; Auty, 2001a). This counter-intuitive outcome has become the subject of intense empirical, theoretical and policy research and underpins the so-called resource curse puzzle.