Dutch Disease, Resource Curse and Development*
Dutch Disease, Resource Curse and Development*
Dutch Disease, Resource Curse and Development*
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<strong>Dutch</strong> <strong>Disease</strong>: The St<strong>and</strong>ard Model II<br />
Figure 1: Effect of the boom on the<br />
labour market<br />
Source: Corden/Neary<br />
(1982: 828).<br />
Before the boom: total labour<br />
supply O s -O t ; wage is w 0 ;<br />
L T <strong>and</strong> L S are labour<br />
dem<strong>and</strong> for tradables <strong>and</strong><br />
non-tradables; equilibrium<br />
in A<br />
Effects of resource boom:<br />
1) resource movement effect:<br />
• direct deindustrialisation A<br />
→ B<br />
• labour dem<strong>and</strong> in the boom<br />
sector crowds out<br />
employment in other<br />
sectors; L T shifts to L‟ T<br />
2) spending effect B → G<br />
Indirect deindustrialisation:<br />
• more revenue → additional<br />
8<br />
spending <strong>and</strong> labour<br />
UNCTAD Division on Technology <strong>and</strong> Logistics - Knowledge Sharing, Training <strong>and</strong> Capacity Development Branch
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