II. International British Congress on Interdisciplinary Scientific Research & Practices
TRACES LEFT IN FINANCIAL HISTORY BY THE DUTCH DISEASE AND THE VENEZUELAN RESOURCE CURSE
Yayıncı:
Liberty Publications
The term Dutch Disease, which was the headline of an article published in the November 26, 1977 issue of The Economist, attracted the world's attention, and this expression has taken its place in the history of finance. This term is used to express the negative effects of rapid growth and growth models on economic indicators due to resource abundance and to express the chaotic situation of a series of structural problems and this painful process caused by rapid welfare increase. Dutch disease is essentially the iconic description of the economic disease and resource curse used to explain the country's economic crisis. The resource curse can be based on energy such as oil and natural gas, or depending on the geographical characteristics of the country, agricultural products grown in coffee, cocoa or service-oriented sectors such as health, education, logistics and construction also have the potential to catch Dutch disease. The flow of hot foreign exchange to countries with resource abundance accelerates, the share of production in the rapidly growing Gross Domestic Product (GDP) decreases in the short term, and agricultural and industrial products become unable to compete in foreign markets due to the rapidly appreciating currency. In this case, production decreases, and industrial and agricultural producers have to turn to this new resource to protect their profits and become importers of the latest economic situation after the disease. The increase in unemployment in sectors where investment decreases causes poverty to increase at the base. While the rich get richer, the poor get poorer and in a possible crisis, the country tries to keep the only sector it relies on afloat. If this resource is the energy sector such as oil and natural gas, where the price changes yearly, the country's economy faces a deep-rooted economic instability problem. Venezuela is another example of a country that grows depending on resources and disrupts the balance of domestic demand based on imports. Located in the north of South America and also described as"a country of gold on a sea of oil", Venezuela attracts the attention of the international political and economic public opinion with the political and economic instabilities it experiences. The underlying cause of slumps, deflation, recession, or depression is the decrease in GDP, which occurs due to the imbalances experienced in countries like Venezuela. However, for this study; In contrast to the crisis that results in a decrease in welfare, the crisis resulting from rapid growth and rapid enrichment is resolved.
