vineri, 25 octombrie 2013

The country’s natural resources: the source of economic disease?

Marcel Ionescu-Heroiu, senior social development specialist at the World Bank, wrote a long article in the journal “Foreign Policy Romania” on the intense debate regarding the exploitation of certain natural resources.

It stated that the paradox of the countries that have natural resources, but do not have a stable economic development, is known by the economic world as the “Dutch disease". (...) In one year, our Dutch friends came across a substantial gas reservoir. They started, of course, to exploit it. Soon, they noticed that the other sectors of the economy, particularly the industrial engines (like Phillips), were affected. The economy first started “coughing”, after which it started making strange noises. It contracted a disease. The “Dutch disease” operates relatively simple: for any country, the availability of resources is a great temptation. The exploitation and sale of these resources generate immediate revenue in excess of the economy. This blessing, however, turns out to be a well disguised curse. The excess ads pressure on the national currency, which appreciation discourages exports. Each euro that is gained from the exploitation will directly compete with money gained from other economic sectors. The problem is that precisely those other sectors are those that enable sustainable development. And there we find the unfair competition.

Of course, the fact that exploitation can generate the Dutch disease phenomenon is not an excuse to cut this sector from a country's economic statement. If resources are exploited in a sustainable and intelligent manner, they are used to help other sectors that are part of the Romanian economy (i.e. it could be used to generate added value for the local economy, not to be exported as raw material). Then this could generate wealth in the field.

Any civilized country anno 2013 needs to be focused on sustainable development while maintaining environmental standards and multi-sectoral involvement.

Dan LUCA / Brussels



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