Dutch Disease, Resource Curse and Development*
Dutch Disease, Resource Curse and Development*
Dutch Disease, Resource Curse and Development*
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What is the best strategy<br />
• Inflationary spending <strong>and</strong> resource movement effects<br />
should be mitigated<br />
• In poor countries use of windfalls for productive investment<br />
advisable - only if non-inflationary<br />
• When windfalls are huge, saving abroad is MUST to avoid<br />
inflation<br />
• Lower current account deficit, repay external debt<br />
• Use of rents for industrial <strong>and</strong> agricultural policy, incl.<br />
productive infrastructure <strong>and</strong> human capital formation<br />
• Monetary policy should target stabilization of REER or<br />
mitigating swings<br />
• Use mainly fiscal policy for keeping price stability<br />
• Save part of windfalls abroad, use for counter-cyclical<br />
policy to bridge slumps<br />
• Mind pro-rich distribution of rents<br />
38<br />
UNCTAD Division on Technology <strong>and</strong> Logistics - Knowledge Sharing, Training <strong>and</strong> Capacity Development Branch
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