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Essay / Dutch disease - 1392
Dutch disease is a phenomenon that occurs when a country experiences a resource boom (Bimenyimana & Vallée, 2011). This may be due to a major discovery or a significant increase in the price of the resource (Bimenyimana & Vallée, 2011). There is therefore a strong demand for the currency of this country, which leads to its appreciation (Bimenyimana & Vallée, 2011). Subsequently, the manufacturing sector suffers a decline, both in terms of production and employment, as local manufacturers find it difficult to compete nationally and internationally (Bimenyimana & Vallée, 2011). It becomes a “disease” when the manufacturing sector is unable to rebound after the end of the resource boom (Beine, Bos and Coulombe, 2012). This phenomenon was first observed in the Netherlands in the 1960s (Bimenyimana and Vallée, 2011). The majority of the Canadian population is concentrated in Ontario and Quebec (Brander, 2014). A large part of the economic activity of these two provinces is linked to the manufacturing sector (Brander, 2014). At the same time, the western provinces are more closely linked to resource-based industries, such as mining, energy and forestry (Brander, 2014). Canada's provinces manage and tax their own natural resources (Boadway, Coulombe and Tremblay, 2013). Thus, Canada's geography combined with jurisdiction over natural resources poses a problem when trying to combat Dutch disease (Bimenyimana & Vallée, 2011). The resource boom affects two different regions of Canada (Bimenyimana and Vallée, 2011). The Western provinces, particularly Alberta, are benefiting from the resource boom in the oil and gas industry (Bimenyimana and Vallée, 2011). Meanwhile, provinces with large manufacturing sectors, particularly Ontario and Quebec...... middle of article ......neeco.2012.05.002.Bimenyimana, C., & Vallée, L. (2011). Curing Dutch Disease in Canada. Policy Options, 75-79. Retrieved from http://archive.irpp.org/po/archive/nov11/bimenyimana.pdf Boadway, R., Coulombe, S. and Tremblay, JF. (2013). Canadian policy prescriptions for Dutch disease. IRPP Insight, 3, 1-26. Retrieved from http://www.irpp.org/assets/research/competitiveness/policy-prescriptions-dutch-disease/Boadway-no3.pdfBrander, J. (2014). Government policy toward business (5th ed.). Mississauga, ON: Wiley. Government of Alberta. (nd). Heritage Fund - Frequently Asked Questions. Retrieved from http://www.finance.alberta.ca/business/ahstf/faqs.htmlGovernment of Alberta. (nd). Improve the quality of life of Albertans. Retrieved from http://www.finance.alberta.ca/business/ahstf/Hill, C. and McKaig, T. (2012). World Affairs Today (3rd ed.). McGraw Hill Ryerson.