The Dutch disease and the technological gap

Reda Cherif

Journal of Development Economics, 2013, vol. 101, issue C, 248-255

Abstract: I present a theory explaining why less technologically advanced countries could be more vulnerable to the Dutch disease. In a bilateral trade model with monopolistic competition and increasing returns to scale, the extent of the crowding-out in the tradable sector depends positively on an interaction between the amount of revenues from natural resources’ exports and the productivity gap vis-à-vis the trade partners. With learning-by-doing, the mechanism is self-reinforcing leading to a productivity divergence pattern. The predictions of the model are consistent with cross-country empirical evidence.

Keywords: Models of trade with imperfect competition and scale economies; Dutch disease (search for similar items in EconPapers)
JEL-codes: F12 O14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:101:y:2013:i:c:p:248-255

DOI: 10.1016/j.jdeveco.2012.10.010

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