40 Years of Dutch Disease Literature: Lessons for Developing Countries

Abstract

This paper surveys the "Dutch disease" literature in developing and emerging countries. It describes the original model of Dutch disease and some main extensions proposed in the theoretical literature, focusing on the ones that match developing countries' conditions. It then reviews various empirical studies that have been conducted and provides evidence that the Dutch disease is still an issue for many developing countries. Finally, it discusses the gaps in the theoretical and empirical literature for understanding the suitable policy instruments to cope with Dutch disease.

Keywords: Dutch disease; Natural resources; Real exchange rate; Resource curse; Structural transformations.