Aid and the Dutch Disease in Low-Income Countries: Informed Diagnoses for Prudent Prognoses

March 1, 2004

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Format: Chicago

Mwanza Nkusu. Aid and the Dutch Disease in Low-Income Countries: Informed Diagnoses for Prudent Prognoses, (USA: International Monetary Fund, 2004) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper demonstrates that the Dutch disease need not materialize in low-income countries that can draw on their idle productive capacity to satisfy the aid-induced increased demand. Diagnoses on, and prognoses for, the Dutch disease should take into account country-specific circumstances to avoid ill-advised policies. The paper emphasizes that using public resources inefficiently can be more painful than real exchange rate appreciations, which may not necessarily embody the Dutch disease.

Subject: Aid flows, Dutch disease, Economic theory, Exports, Foreign aid, Human capital, International trade, Labor, Trade balance

Keywords: Aid flows, And Poverty, Appreciation, Core Dutch disease framework, Core Dutch disease theory, Dutch disease, Dutch disease economics, Dutch disease model, Dutch disease-type effect, Economic Growth, Exchange Rate, Exports, Foreign Aid, Human capital, ODA, ODA flow, ODA inflow, RER, RER appreciation, Sub-Saharan Africa, Trade balance, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/049
Stock No:

WPIEA0492004
ISBN:

9781451846874
ISSN:

1018-5941

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