A Complete Guide to Dutch Disease

On the economic decisions about managing natural resources, one challenging factor is the famous phenomenon called the Dutch disease. Regardless of the level of development, any country could expose herself to this so-called disease if they find themselves in a natural resource abundance. The only thin line between being affected by this disease and becoming a success story lies in the prudent governance of the natural resources trade and the economy revolves around them. This paper investigates the main causes of the Dutch disease and the mechanisms how it would affect an economy. It is aimed to provide an insight on how countries with different characteristics have reacted to discovery of natural resources and therefore how they have handled a potential Dutch disease problem. In this direction a Dutch disease index is introduced to help identifying the disease. The causes and effects of the disease are handled in detail to be able to comprehend its scope. The policy implications presented in the paper inferred from the country specific cases in turn can play an important role in the aforementioned task of becoming a success story.