Wednesday, May 13, 2009
Norway, Dutch Disease, and Saving
Saw this article about Norway today. It seems obviousl that countries with resource wealth can use savings to keep their economy stable during a global recession like the one we're in. But this very saving can also have impacts on that country's exchange rate, as well as on wages and returns to capital that stymie investment in manufacturing sectors during normal times. It's known as dutch disease.