Manufacturing sector resiliency to energy booms: Empirical evidence from Norway, the Netherlands and the United Kingdom

BIS Working Papers  |  No 13  | 
01 September 1990

A natural resource based export boom can increase overall national wealth and improve a country's balance of payments position, but leave some sectors in a protracted and costly adjustment process. This phenomenon is known as "Dutch disease", a term associated with the difficulties experienced by the Dutch manufacturing sector after the natural gas boom, hike in world energy prices and expansion of the gas-revenue financed government sector expansion in the Netherlands. This paper reviews the theoretical predictions of a country experiencing a resource boom. It then briefly describes the country experiences of the Netherlands, Norway and the United Kingdom in this regard and finally develops a methodology for a more formal statistical analysis designed to shed light on the relationships between the energy sector and manufacturers in these countries, as well as to identify other potential explanatory factors.