Editing Resource curse (section)

=== Dutch disease ===
{{main|Dutch disease}}
[[Dutch disease]], defined as the relationship between the increase in the economic development of a specific sector (for example [[natural resources]]) and a decline in other sectors, first became apparent after the Dutch discovered a huge natural gas field in [[Groningen gas field|Groningen]] in 1959. [[The Netherlands]] sought to tap this resource in an attempt to export the gas for profit. However, when the gas began to flow out of the country, its ability to compete against other countries' exports declined. With the Netherlands focusing primarily on the new gas exports, the Dutch currency began to appreciate, which harmed the country's ability to export other products. With the growing gas market and the shrinking export economy, the Netherlands began to experience a [[recession]]. 

This process has been witnessed in multiple countries around the world including but not limited to [[Venezuela]] ([[History of the Venezuelan oil industry#Dutch Disease|oil]]), [[Angola]] ([[Mining industry of Angola#Diamonds|diamonds]], [[Sonangol Group|oil]]), the [[Democratic Republic of the Congo]] ([[Mining industry of the Democratic Republic of the Congo|diamonds]]), and various other nations. All of these countries are considered "resource-cursed".<ref>{{cite book|last=O'Neil|first=Patrick|title=Essentials of Comparative Politics|url=https://archive.org/details/isbn_9780393976540|url-access=registration|year=2004|publisher=Norton|location=New York, London|page=[https://archive.org/details/isbn_9780393976540/page/147 147]|isbn=9780393976540}}</ref>

Dutch disease makes tradable goods less [[Competitive#Economics|competitive]] in world markets. Absent [[currency manipulation]] or a [[currency peg]], appreciation of the currency can damage other sectors, leading to a compensating unfavorable [[balance of trade]]. As imports become cheaper in all sectors, internal employment suffers and with it the skill infrastructure and manufacturing capabilities of the nation. To compensate for the loss of local employment opportunities, government resources are used to artificially create employment. The increasing national revenue will often also result in higher government spending on health, welfare, military, and public infrastructure, and can cause burdens on the economy if done corruptly or inefficiently. While the decrease in the sectors exposed to international competition leaves the economy vulnerable to price changes in the natural resource and consequently even greater dependence on natural resource revenue, this can be managed by active and effective use of hedge instruments such as [[Forward contract|forwards]], [[Futures contract|futures]], [[Option (finance)|options]], and [[Swap (finance)|swaps]]; however, if it is managed inefficiently or corruptly, this can lead to disastrous results. Also, since [[Productivity (economics)|productivity]] generally increases faster in the manufacturing sector than in the government, the economy will have lower productivity gains than before.

According to a 2020 study, giant resource discoveries led to a substantial appreciation of the real exchange rate.<ref>{{Cite journal|last1=Harding|first1=Torfinn|last2=Stefanski|first2=Radoslaw|last3=Toews|first3=Gerhard|title=Boom Goes the Price: Giant Resource Discoveries and Real Exchange Rate Appreciation|journal=The Economic Journal|year=2020|volume=130|issue=630|pages=1715–1728|language=en|doi=10.1093/ej/ueaa016|doi-access=free}}</ref>