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‘Dutch Disease Lite’ in Australia’s Economy
The term “Dutch disease” refers to the hollowing out of an economy’s manufacturing sector (and other non-mining-related sectors) following an increase in mining investment and income and a related increase in the value of the currency. The term derives from the decline in the Netherlands’ manufacturing sector in the 1960s after the discovery of a major natural gas field. Not only does the mining investment redirect labour and capital resources away from other sectors, but the export-driven currency strength also hinders demand within the non-mining sectors. That said, the diagnosis of full-blown Dutch disease also requires the higher demand for commodities and investment in mining to be temporary.
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