Development
Resource Curse (Dutch Disease)
Definition
The paradox where natural resource abundance leads to economic underperformance — through currency appreciation, institutional decay, and crowding out of manufacturing.
Explanation
Named after Netherlands' experience with North Sea gas. Resource exports strengthen the currency, making manufacturing uncompetitive. Easy resource revenue reduces incentives for institutional reform. Norway is the exception: its sovereign wealth fund saves resource revenue rather than spending it. Nigeria, Venezuela, and many African oil states illustrate the curse.