Manufacturing Sector Resiliency to Energy Booms: Empirical Evidence from Norway, the Netherlands and the United Kingdom
68 Pages Posted: 13 Dec 2005
Date Written: September 1990
Abstract
A natural resource based export boom can increase overall national wealth and improve a country's balance of payments position, but leave some sectors in a protracted and costly adjustment process. This phenomenon is known as "Dutch disease", a term associated with the difficulties experienced by the Dutch manufacturing sector after the natural gas boom, hike in world energy prices and expansion of the gas-revenue financed government sector expansion in the Netherlands. This paper reviews the theoretical predictions of a country experiencing a resource boom. It then briefly describes the country experiences of the Netherlands, Norway and the United Kingdom in this regard and finally develops a methodology for a more formal statistical analysis designed to shed light on the relationships between the energy sector and manufacturers in these countries, as well as to identify other potential explanatory factors.
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