The Dutch disease and its neutralization: a Ricardian approach
Autor(a) principal: | |
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Data de Publicação: | 2008 |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Revista de Economia Política |
Texto Completo: | http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572008000100003 |
Resumo: | The Dutch disease is a major market failure originated in the existence of cheap and abundant natural or human resources that keep overvalued the currency of a country for an undetermined period of time, thus turning non profitable the production of tradable goods using technology in the state-of-the-art. It is an obstacle to growth on the demand side, because it limits investment opportunities. The severity of the Dutch disease varies according to the extent of the Ricardian rents involved, i.e., according to the difference between two exchange rate equilibriums: the current or market rate and the industrial rate - the one that make viable efficient tradable industries. Its main symptoms, besides overvalued currency, are low rates of growth of the manufacturing industry, artificially high real wages, and unemployment. Its neutralization requires managing the exchange rate. The principal instrument for that is a sales or export tax on the commodities that give origin to the Dutch disease. In order to neutralize it policymakers face major political obstacles since it involves taxing exports and reducing wages. Finally, this papers argues that there is an extended concept of Dutch disease: besides having its origin in natural resources, it may arise from cheap labor provided that the wage spread in the developing country is considerably larger than in the developed one - a condition that is usually present. |
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The Dutch disease and its neutralization: a Ricardian approachexchange rateRicardian rentseconomic growthThe Dutch disease is a major market failure originated in the existence of cheap and abundant natural or human resources that keep overvalued the currency of a country for an undetermined period of time, thus turning non profitable the production of tradable goods using technology in the state-of-the-art. It is an obstacle to growth on the demand side, because it limits investment opportunities. The severity of the Dutch disease varies according to the extent of the Ricardian rents involved, i.e., according to the difference between two exchange rate equilibriums: the current or market rate and the industrial rate - the one that make viable efficient tradable industries. Its main symptoms, besides overvalued currency, are low rates of growth of the manufacturing industry, artificially high real wages, and unemployment. Its neutralization requires managing the exchange rate. The principal instrument for that is a sales or export tax on the commodities that give origin to the Dutch disease. In order to neutralize it policymakers face major political obstacles since it involves taxing exports and reducing wages. Finally, this papers argues that there is an extended concept of Dutch disease: besides having its origin in natural resources, it may arise from cheap labor provided that the wage spread in the developing country is considerably larger than in the developed one - a condition that is usually present.Centro de Economia Política2008-03-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersiontext/htmlhttp://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572008000100003Brazilian Journal of Political Economy v.28 n.1 2008reponame:Revista de Economia Políticainstname:EDITORA 34instacron:EDITORA_3410.1590/S0101-31572008000100003info:eu-repo/semantics/openAccessBresser-Pereira,Luiz Carloseng2008-03-07T00:00:00Zoai:scielo:S0101-31572008000100003Revistahttps://centrodeeconomiapolitica.org.br/repojs/index.php/journalONGhttps://centrodeeconomiapolitica.org.br/repojs/index.php/journal/oai||cecilia.heise@bjpe.org.br1809-45380101-3157opendoar:2008-03-07T00:00Revista de Economia Política - EDITORA 34false |
dc.title.none.fl_str_mv |
The Dutch disease and its neutralization: a Ricardian approach |
title |
The Dutch disease and its neutralization: a Ricardian approach |
spellingShingle |
The Dutch disease and its neutralization: a Ricardian approach Bresser-Pereira,Luiz Carlos exchange rate Ricardian rents economic growth |
title_short |
The Dutch disease and its neutralization: a Ricardian approach |
title_full |
The Dutch disease and its neutralization: a Ricardian approach |
title_fullStr |
The Dutch disease and its neutralization: a Ricardian approach |
title_full_unstemmed |
The Dutch disease and its neutralization: a Ricardian approach |
title_sort |
The Dutch disease and its neutralization: a Ricardian approach |
author |
Bresser-Pereira,Luiz Carlos |
author_facet |
Bresser-Pereira,Luiz Carlos |
author_role |
author |
dc.contributor.author.fl_str_mv |
Bresser-Pereira,Luiz Carlos |
dc.subject.por.fl_str_mv |
exchange rate Ricardian rents economic growth |
topic |
exchange rate Ricardian rents economic growth |
description |
The Dutch disease is a major market failure originated in the existence of cheap and abundant natural or human resources that keep overvalued the currency of a country for an undetermined period of time, thus turning non profitable the production of tradable goods using technology in the state-of-the-art. It is an obstacle to growth on the demand side, because it limits investment opportunities. The severity of the Dutch disease varies according to the extent of the Ricardian rents involved, i.e., according to the difference between two exchange rate equilibriums: the current or market rate and the industrial rate - the one that make viable efficient tradable industries. Its main symptoms, besides overvalued currency, are low rates of growth of the manufacturing industry, artificially high real wages, and unemployment. Its neutralization requires managing the exchange rate. The principal instrument for that is a sales or export tax on the commodities that give origin to the Dutch disease. In order to neutralize it policymakers face major political obstacles since it involves taxing exports and reducing wages. Finally, this papers argues that there is an extended concept of Dutch disease: besides having its origin in natural resources, it may arise from cheap labor provided that the wage spread in the developing country is considerably larger than in the developed one - a condition that is usually present. |
publishDate |
2008 |
dc.date.none.fl_str_mv |
2008-03-01 |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572008000100003 |
url |
http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572008000100003 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
10.1590/S0101-31572008000100003 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
text/html |
dc.publisher.none.fl_str_mv |
Centro de Economia Política |
publisher.none.fl_str_mv |
Centro de Economia Política |
dc.source.none.fl_str_mv |
Brazilian Journal of Political Economy v.28 n.1 2008 reponame:Revista de Economia Política instname:EDITORA 34 instacron:EDITORA_34 |
instname_str |
EDITORA 34 |
instacron_str |
EDITORA_34 |
institution |
EDITORA_34 |
reponame_str |
Revista de Economia Política |
collection |
Revista de Economia Política |
repository.name.fl_str_mv |
Revista de Economia Política - EDITORA 34 |
repository.mail.fl_str_mv |
||cecilia.heise@bjpe.org.br |
_version_ |
1754122480416456704 |