what is dutch disease 
dutch disease is an economic term for the negative consequences that can arise from a spike in the value of a nation s currency it is primarily associated with the new discovery or exploitation of a valuable natural resource and the unexpected repercussions that such a discovery can have on the overall economy of a nation understanding dutch diseasedutch disease exhibits the following two chief economic effects 1both phenomena result from a higher local currency in the long run these factors can contribute to unemployment as manufacturing jobs move to lower cost countries meanwhile non resource based industries suffer due to the increased wealth generated by resource based industries origin of the term dutch diseasethe term dutch disease was coined by the economist magazine in 1977 when the publication analyzed a crisis that occurred in the netherlands after the discovery of vast natural gas deposits in the north sea in 1959 the newfound wealth and massive exports of oil caused the value of the dutch guilder to rise sharply making dutch exports of all non oil products less competitive on the world market unemployment rose from 1 1 to 5 1 and capital investment in the country dropped 2dutch disease became widely used in economic circles as a shorthand way of describing the paradoxical situation in which seemingly good news such as the discovery of large oil reserves negatively impacts a country s broader economy examples of dutch diseasein the 1970s dutch disease hit great britain when the price of oil quadrupled making it economically viable to drill for north sea oil off the coast of scotland by the late 1970s britain had become a net exporter of oil though it had previously been a net importer although the value of the pound skyrocketed the country fell into recession as british workers demanded higher wages and britain s other exports became uncompetitive 31in 2014 economists in canada reported that the influx of foreign capital related to exploitation of the country s oil sands may have led to an overvalued currency and a decreased competitiveness in the manufacturing sector simultaneously the russian ruble greatly appreciated for similar reasons 4 in 2016 the price of oil dropped significantly and both the canadian dollar and the ruble returned to lower levels easing the concerns of dutch disease in both countries 5