We have been afflicted with what economists term 'the Dutch Disease
syndrome', characterised by high exchange rates and a shift of all productive forces into the import sector to the detriment of agriculture and industrialisation.
The State Oil Fund of Azerbaijan, established in 1999, aims at efficient accumulation of resources and placement of assets abroad, as well as for the preservation and multiplication of funds received from the effective management of oil revenues in order to minimize the negative effect to the economy, prevent "Dutch disease
" to some extent, promote resource accumulation for future generations and support current social and economic processes in Azerbaijan.
To avoid the popular 'Dutch disease
', where the discovery of oil would have led to the neglect of other sectors of the economy, Ghana opted to adopt the Norwegian best practices, when it started commercial production of oil in 2010.
They bring up the argument that the Dutch disease
has plagued the economy since the 1980s where an overvalued exchange rate encouraged cheap imports and discouraged exports which, in turn, led to a high trade deficit.
Equally, to avoid adverse effects (dubbed 'Dutch disease
') when exceptional capital inflows cease (as they did post-9/11 and recently, with CPEC), capital inflows should also be better regulated.
On the other hand, certain countries have been aflicted by the oil curse, the so-called Dutch disease
. The Dutch disease
refers to a situation where there is an increase in economic development in the oil sector and a decline in other sectors.
An open market economy, despite enormous trade and investment earning opportunities, is a challenge to navigating a potential "Dutch disease
" phenomenon (negative consequences from spikes in local currency value) and 'primitivising' effects to the economy.An aggressive drive towards this realisation is on course with the new Integrated National Exports Development and Promotion Strategy, which has set an annual macro- and sector targets.
"The Fund invests around the world except for Norway in order to protect the country from the Dutch Disease
and its effects such as the overheating of the economy and the loss of competitiveness in other non-hydrocarbons related sectors."
The other topic is how Lebanon should protect its currency and economy in the future should petroleum profits start flowing, since any petroleum related legislation we draft today will need to protect us from the famous Dutch disease
. The issue that most do not realize is that those two topics are very much intertwined, because Lebanon is already suffering from Dutch disease
But in Astana they never suffered from the "Dutch disease
" and did not rely on only one sector of the economy.
The Mena remains mostly absent from past economic miracles, which I partly attribute to a Mena "Dutch Disease
He goes on to say that the Dutch disease
' of borrowing incessantly at whatever cost is simply not sustainable.