Before the fields run dry: How to avoid the 'Dutch Disease'

• Main Author: Knowledge@SMU
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2010
• Subjects: Accounting; Business; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/ksmu/38; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1037&context=ksmu
• Institution: Singapore Management University

For any economy, the discovery of abundant natural resources is almost akin to striking nature's lottery. But as any eager financial planner might say to a lottery winner, no windfall can last for long without a solid financial plan. Singapore, a country admired for its relatively substantial national reserves, is home to almost no natural resources (except for human capital, we're told). This lack of natural resources, however, may well be the reason behind the country's economic success. According to Svein Gjedrem, governor of Norges Bank, natural resource-rich countries often suffer from a 'disease' that causes them to rely too heavily on the easy money that comes from exploiting those natural resources.