Economy
Dutch Disease
Definition
The phenomenon where a boom in natural resource exports causes the domestic currency to appreciate, making other export sectors (manufacturing, agriculture) less competitive.
Explanation
Named after the Netherlands' experience with North Sea gas in the 1960s, Dutch Disease explains why resource-rich countries often have weak manufacturing sectors. Oil-exporting nations are particularly susceptible — when oil revenues flood in, the currency strengthens, imports become cheap, and domestic manufacturers cannot compete. Norway has managed this through its sovereign wealth fund; Nigeria and Venezuela have not.