Dutch Disease

Dutch Disease




1) Why is it that increasing exports can bring about negative results for an economy? What kind of exports bring about these issues? What economicsectors are more negatively affected?




During the last six years, when Colombia began use CPTA, its Colombian peso has appreciated constantly. This effect causefails the competitiveness for industry and Agricola sector which feel the negatively effects specially.

But, this effect didn’t come alone, the constantly appreciate ofColombian Peso has produced for many reasons:

- Colombia has converted in an important petroleum exporter, but in concretes terms, is the third most important producer inLatin America.

These exports are giving a “Deutch Disease” in Colombia.




(In Deutch, this disease was produced when natural gas production increaserapidly)




This sector receive a lot of money, but have a problem: Even thought the production increase, the number of job are the same or increase lower.So, in these countries this “diseases” are in sector which exports mainly products or commodities, because the products don’t suffer a transformation that let tocreate more jobs. Besides that, if a lot of money enters in the economy but only in one or two sectors, the last ones fails their respective participation in the GDP and oureconomy depend of two sectors, and this possible is very dangerous: we need to diversify for minimizing the risk in the markets.



- Also, the extremely increase of FDI(Foreign Direct Invesment) in our country directed to petroleum and mining especially.





Is there anything resource-rich countries can do to resist the Dutch disease?