Aid and the Dutch Disease in Low-Income Countries: Informed Diagnoses for Prudent Prognoses
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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.
Series:
Working Paper No. 2004/049
Subject:
Aid flows Dutch disease Economic theory Exports Foreign aid Human capital International trade Labor Trade balance
English
Publication Date:
March 1, 2004
ISBN/ISSN:
9781451846874/1018-5941
Stock No:
WPIEA0492004
Pages:
19
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