Aid and the Dutch Disease in Low-Income Countries

Download or read book Aid and the Dutch Disease in Low-Income Countries written by Mwanza Nkusu and published by International Monetary Fund. This book was released on 2004-03 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper demonstrates that the Dutch disease need not materialize in low-income countries that can draw on their idle productive capacity to satisfy the aid-induced increased demand. Diagnoses on, and prognoses for, the Dutch disease should take into account country-specific circumstances to avoid ill-advised policies. The paper emphasizes that using public resources inefficiently can be more painful than real exchange rate appreciations, which may not necessarily embody the Dutch disease.