Dutch disease

I was just reading up on the phenomenon that is referred to as "Dutch Disease".
When a working economy hits payday with some valuable raw material, it needs to guard against this curse of abundant resources.

Examples of this can be seen in countries that discover Gas or Oil. These new resources suddenly bring foreign capital. This imbalance leads to the strengthening of the local currency.

The local farmers and manufacturers find themselves paying salaries etc.. in the local currency that since the new influx of foreign currency makes their product uncompetitive. Soon all goods and produce are imported and it's far more economical to import from abroad.

Local farmers and manufacturers are unable to compete and end up going belly up. The only game in town is oil and oil-related trade.  All businesses that are not associated with oil directly, are unable to survive.

The oil sector that is doing well, can only employ a small portion of people and as a result, unemployment is on the rise.

A desperate public that can't find a way into the oil trade will bribe its way in, and this leads to large scale corruption.

The economy and landscape is destroyed by the discovery of oil or gas if the politicians don't guard against the Dutch Disease.

M Parak
July 2018