Re: Re: Re: Question about "dutch disease"

[ALI KADRI <akadri_00@xxxxxxxxx>]

This begs the question: do the Gulf states exhibit a
Dutch disease syndrome?
1 they had no manufacturing sector to begin with.
2 they continued to import nearly all consumer goods
and export a single product
3 Saudi Arabia (the biggest)also has a huge debt.
I have seen some argue that the Gulf is inflicted with
Dutch disease, but this seems wholly inappropriate or
misplaced.
One person said "if oil is so bad why don't they leave
it in the ground"

--- Michael Perelman <michael@xxxxxxxxxxxxxxxxx>
wrote:
> Supposdly, the Dutch boom caused resources to be
> drawn away from the
> manufacturing sector, making it less competitive.
> Some have drawn
> parallels with the influx of gold to Spain from L.
> America.
>
> On Sun, Feb 24, 2002 at 08:40:53PM -0800, Eugene
> Coyle wrote:
> > Why wouldn't the cheaper natural resource, as an
> input to the productive
> > process, lower the cost of manufactured goods and
> make them MORE
> > competitive with other nations?
> >
> >     Further, the cheaper natural resource, to the
> extent it is a consumer
> > commodity as well, e. g. home heating, reduces the
> cost of living doesn't
> > it?  And then the additional real income can be
> spent on domestic
> > products, adding to employment and creating a
> general boom.
> >
> >     As I write this I wonder if the assumption of
> the country being
> > already at full employment isn't crucial to the
> onset of the disease.
> > That assumption distorts everything -- and as old
> as I am I have never
> > seen or read of actual full employment.
> >
> > Gene Coyle
> >
> > Bill Lear wrote:
> >
> > > According to investorwords.com, "dutch disease"
> is:
> > >
> > >      The  deindustrialization of a  nation's
> economy  that occurs
> > >      when the discovery of a natural resource
> raises the value of
> > >      that  nation's  currency,  making
> manufactured  goods  less
> > >      competitive  with  other  nations,
> increasing  imports  and
> > >      decreasing  exports.  The term  originated
> in  Holland after
> > >      the discovery of North Sea gas.
> > >
> > > A nephew of mine who is majoring in economics
> here in Austin asked me
> > > about this, and I was entirely ignorant of it,
> but it from what he
> > > told me, it sounded suspicious.  The definition
> here makes the claim
> > > that when the value of a nation's currency
> increases,
> > > deindustrialization occurs.  It also claims that
> discovery of a
> > > natural resource can lead to a rise in a
> nation's currency.
> > > Simplistic formula like this are often used to
> mask the operations of
> > > nefarious power, so I'm curious if this is a
> valid concept, etc.
> > >
> > > If a natural resource were discovered, why would
> it necessarily result
> > > in a rise in value of the currency?  If Nigeria
> discovers lots of oil,
> > > why could it not use the proceeds from the sale
> to *increase*
> > > industrialization?  Policy decisions seem to me
> to be operative here,
> > > but I need some help figuring this out...
> > >
> > > Bill
> >
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx
>


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