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Dutch Disease

"In the original sense of the term, Dutch disease refers to a situation in which an extra wealth from an export boom - such as a discovery of major resource deposits—leads to a contraction of other tradable activities by giving rise to a real appreciation of the home currency.


Although Dutch disease is generally associated with mineral resources, the analytical framework of Dutch disease is equally applicable to a wealth increase that results from large inflows of foreign currency - foreign aid, remittances and capital inflows - as well as a non extractive export boom, such as one associated with the displacement of older industry by technologically more advanced activities."




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