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How to neutralize the Dutch disease notwithstanding the natural resources curse

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  • Bresser-Pereira, Luiz Carlos

Abstract

This paper discusses two closely related concepts – the Dutch disease and the natural resource curse – and a third one, exchange rate populism, associated to the curse. The Dutch disease is a long-term overvaluation of the national currency that originates from the exports of commodities which originate Ricardian rents. The natural resource curse is the generalized rent-seeking that takes over a country that exports commodities. And exchange rate populism is a political practice of keeping the national currency overvalued, so to assure reelection to the politician. This paper shows that the curse and the populism will make difficult for a country to neutralize the Dutch disease, which blocks investment and growth, but argues that the fight against the natural resource curse and the exchange rate populism will be strengthened if the policymakers realize that there is a relatively simple policy that effectively neutralize the disease – a policy that was sketched almost ten years ago (Bresser-Pereira 2009), but remains hardly known by economists.

Suggested Citation

  • Bresser-Pereira, Luiz Carlos, 2017. "How to neutralize the Dutch disease notwithstanding the natural resources curse," Textos para discussão 452, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    • Handle: RePEc:fgv:eesptd:452
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    References listed on IDEAS

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    1. Luiz Carlos Bresser-Pereira, 2016. "Reflecting on new developmentalism and classical developmentalism," Brazilian Journal of Political Economy, Center of Political Economy, vol. 36(2), pages 237-265.
    2. Venables, Anthony J. & Maloney, William & Kokko, Ari & Bravo Ortega, Claudio & Lederman, Daniel & Rigobón, Roberto & De Gregorio, José & Czelusta, Jesse & Jayasuriya, Shamila A. & Blomström, Magnus & , 2007. "Natural Resources: Neither Curse nor Destiny," IDB Publications (Books), Inter-American Development Bank, number 350, November.
    3. Bresser Pereira,Luiz Carlos, 2010. "Globalization and Competition," Cambridge Books, Cambridge University Press, number 9780521144537, September.
    4. repec:idb:brikps:59538 is not listed on IDEAS
    5. Daniel Lederman & William F. Maloney, 2007. "Natural Resources : Neither Curse nor Destiny," World Bank Publications, The World Bank, number 7183, September.
      • Anthony J. Venables & William Maloney & Ari Kokko & Claudio Bravo Ortega & Daniel Lederman & Roberto Rigobón & José De Gregorio & Jesse Czelusta & Shamila A. Jayasuriya & Magnus Blomström & L. Colin X, 2007. "Natural Resources: Neither Curse nor Destiny," IDB Publications (Books), Inter-American Development Bank, number 59538 edited by William Maloney & Daniel Lederman, February.
    6. Bresser Pereira,Luiz Carlos, 2010. "Globalization and Competition," Cambridge Books, Cambridge University Press, number 9780521196352, September.
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    Cited by:

    1. Niass, Dieynaba, 2022. "Does Natural Resources Endowment Affect Export Diversification In Africa? A Cross-Country Analysis," Conference papers 333416, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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