Dutch Disease

Dutch disease is the export-crowding-out mechanism in Chevron, Venezuela and the Paradox of Plenty. The Planet Money episode says Venezuela’s oil boom pushed up the currency, making Venezuelan coffee too expensive compared with competitors and helping the country lose its older coffee-export market.

In the source, Dutch disease is one reason Petrostate wealth becomes fragile. Oil revenue can make imports cheap and consumption easier while weakening agriculture, manufacturing, and other tradable sectors. That links the early oil boom to later Oil Revenue Dependence, because a country that loses productive diversity has fewer buffers when oil prices or sanctions turn against it.

How to beat the resource curse in Norway (Summer School) adds Norway as the contrasting case. The episode names Dutch disease as a risk when oil wealth makes other exports such as cod more expensive abroad, but it argues that Resource Curse Governance, Slow Extraction Strategy, technical reinvestment, and the Norwegian Oil Fund helped keep oil from overwhelming the rest of the economy in the same way.

Key Claims

• Commodity inflows can appreciate a currency and make non-commodity exports less competitive.
• The loss of older export sectors can be hidden during the boom because imported goods remain affordable.
• Dutch disease becomes politically dangerous when governments treat boom revenue as permanent.
• The concept is one channel through which a Petrostate can become a Political Resource Curse case.
• Norway adds that Dutch disease is a risk to manage through institutions, not an unavoidable fate of oil discovery.

Connections

• Venezuela and Lake Maracaibo - source case and oil-discovery shock.
• Norway, Ekofisk Oil Field, and Norwegian Oil Fund - contrasting oil-governance branch added by the Norway Summer School source.
• Petrostate and Oil Revenue Dependence - broader dependence pattern.
• Commodity Price Exposure - adjacent commodity-risk concept.
• Political Resource Curse and Resource Curse Governance - governance frames that the episodes build beyond the exchange-rate mechanism.