Venezuela is going Dutch

The co-called Dutch Disease — coined by The Economist in 1977 — is a condition when a country has so much by way of resources that everything else is neglected.  It was applied to Holland after it had discovered the gigantic natural Groningen gas field in 1959 and started to sell the gas all round Europe.  The country became immensely prosperous very quickly, so much so that almost all other businesses were neglected as all available investment went into the gas industry.  By the mid-1970s, however, the gas started running out and Holland found itself in danger of having a far worse economy than if it had never discovered Groningen at all.

Not long afterwards, Norway had also discovered contiguous gas fields off its coast also.  With the example of Holland before it, Norway decided that all profits went into a national investment fund that would be devoted to state pensions and welfare in later years — from which they are now benefiting.

Since then, even tough fully aware of the dangers, other countries have fallen into the same trap.  Two current examples are Russia and Saudi Arabia. Neither of them has much by way of an economy that isn’t dependent on oil — no consumer goods industries of their own, for example — and they’re both suffering today.

Exactly the same — only much worse — is now happening in Venezuela.  With some of the largest oil fields in the world that could have done so much good had profits been invested wisely, it is now only a matter of time — weeks at the most — whether  Venezuela’s government or economy will completely collapse first.

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