Dutch disease

Definition

Dutch disease refers to an economic phenomenon where the discovery and exploitation of natural resources lead to negative consequences for other sectors of the economy. It often occurs when revenues from resource exports cause currency appreciation and make other sectors less competitive.

Related terms

Resource curse: The resource curse describes how countries rich in natural resources may experience negative outcomes such as corruption, inequality, and economic instability. It is often associated with Dutch disease.

Export-oriented economy: This term refers to an economic strategy where a country focuses on producing goods or services for export rather than primarily catering to domestic consumption. Ghana's reliance on resource exports can be seen as an example of an export-oriented economy.

Economic dependence: Economic dependence occurs when a country heavily relies on a specific sector or external sources (such as foreign aid) for its economic sustenance. The Dutch disease can increase Ghana's economic dependence on resource exports.