What is Dutch disease?

Dutch disease is a term used to describe the condition in which the country's economy is damaged after increasing its income. This term was named after the incident in the Netherlands at the age of 60, in which a large amount of natural gas was discovered. Dutch disease eventually leads to a lack of competitiveness in other markets and the country is beginning to rely on imports. Although commonly used in terms of natural resources, it can apply to any situation in which the Earth suddenly becomes richer. As a result of the newly found wealth, the country will begin to suffer in other areas. In the example of finding natural gas or oil, many landowners find themselves with greater income due to finding. Thicketed that individuals who previously participated in other stores now focus only on efforts, which brings them the most money. When this happens, many industries that are not related to the primary industry will begin to suffer.

When many individuals suddenly have more money, it can take willing workers from the necessary industries. For example, individuals who previously worked in production plants will cease to strive for further effort. If this happens, this negatively affects the factory ability to compete with the rest of the market. The country will soon find that its exports are no longer competitive.

The second part of the Dutch disease finds that the country relies more on imports. The areas in which the countries could rely on are no longer viable. In these areas, the country can no longer produce the assets needed at competitive prices. This Results in the country must buy certain things from other countries.

At this point, the country relies on imports just to get. Due to excessive reliance on imports, the country's economy is beginning to suffer. This may negatively affect the floating exchange rate between two currencies. As a result of Dutch disease, the Earth finds itself in a situation that is actually worse than before,before its inhabitants were achieved.