Last week, BC Premier Christy Clark attacked Federal NDP Leader Thomas Mulcair for raising the economic downside of becoming a petro-state – namely, the phenomenon known as “Dutch Disease”. Speaking to CBC’s Evan Solomon, Clark referred to Mulcair as “goofy” for questioning the unrestrained expansion of the Alberta Tar Sands to new markets in Asia.
lvdh: “Dutch Disease” – from Wikipedia: “In economics, the Dutch disease is a concept that explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The mechanism is that an increase in revenues from natural resources (or inflows of foreign aid) will make a given nation’s currency stronger compared to that of other nations (manifest in an exchange rate), resulting in the nation’s other exports becoming more expensive for other countries to buy, making the manufacturing sector less competitive. While it most often refers to natural resource discovery, it can also refer to “any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment”.[1]” http://en.wikipedia.org/wiki/Dutch_disease
What is the “Dutch Disease”