Dutch disease

Dutch disease is an economic condition in which a boom in one export sector weakens other industries through currency appreciation and resource shifts.

Spending effect: The rise in domestic demand that follows increased income, often pushing up prices in sectors with limited supply. Resource revenues raise local spending, increasing the prices and wages that exporters outside the boom must pay.
Groningen gas field: A large natural-gas field discovered in the Netherlands in 1959. Its development supplied the Dutch export boom behind the condition's name.
Sovereign wealth fund: A state-owned investment fund that manages public savings, often from commodity revenues. Saving windfall income abroad can limit domestic spending pressure and preserve wealth for future generations.
Dutch disease versus resource curse: A distinction between a specific competitiveness mechanism and the broader set of harms associated with resource wealth. Dutch disease names one pathway; the resource curse also includes political and institutional failures.
Resource movement effect: The shift of labor and capital toward a booming sector and away from other industries. Higher returns draw workers and investment out of manufacturing and other tradable sectors.
The Economist: A British weekly newspaper covering international news, politics, business, and economics. The magazine popularized the phrase “Dutch disease” in a 1977 account of the Netherlands' industrial difficulties.
Sterilization (economics): Central-bank actions that offset the effect of foreign-exchange transactions on domestic money supply. Sterilization can reduce monetary expansion when export earnings are converted into domestic currency.
Resource curse: The claim that abundant natural resources can undermine a country's economic and political development. It is broader than Dutch disease, which specifically concerns effects such as appreciation and sectoral shifts.
Real exchange rate: The relative price of domestic goods and services compared with those abroad, adjusted for exchange rates. Domestic price increases or currency appreciation make non-boom exports more expensive to foreign buyers.
Netherlands: A country in northwestern Europe, known in Dutch as Nederland. The Netherlands is the historical case from which the condition takes its name.

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