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Mineral-Rich Countries and Dutch Disease : Understanding the Macroeconomic Implications of Windfalls and the Development Prospects, The Case of Equatorial Guinea

ABSORPTIVE CAPACITY ACCOUNTABILITY ACCOUNTING ADMINISTRATIVE FEES ADVERSE CONSEQUENCE ADVERSE CONSEQUENCES ADVERSE IMPACT AGRICULTURE ANNUAL EXPENSES APPROVAL PROCEDURE ASSET MANAGEMENT AUDITING AUDITS BANK ACCOUNTS BANK OF CENTRAL AFRICAN STATES BANK POLICY BUDGET DEFICIT CAPACITY BUILDING CAPITAL EXPENDITURE CAPITAL GOODS CAPITAL GOODS INDUSTRIES CAPITAL INVESTMENT CAPITAL MARKETS CASH MANAGEMENT CENTRAL BANK CENTRALIZATION CHECKS COMMERCIAL BANK COMMERCIAL BANKS COMMODITIES COMPARATIVE ADVANTAGE COMPETITIVENESS COMPREHENSIVE DEVELOPMENT CONTINGENCY CONTRIBUTION CREDITS CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT CURRENT EXPENDITURES DEBT DEBT BURDENS DEPOSIT DEPOSITS DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT STRATEGY DOMESTIC CURRENCY DOMESTIC ECONOMY DOMESTIC INFLATION DURABLE DUTCH DISEASE ECONOMETRIC EVIDENCE ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENTS ECONOMIC GROWTH ECONOMIC MANAGEMENT ECONOMIC OUTLOOK ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMICS RESEARCH EMPLOYMENT EXCHANGE RATE VOLATILITY EXPENDITURE EXPENDITURE RESTRAINT EXPENDITURES EXPORT EARNINGS EXPORT REVENUES EXPORTER EXPORTERS EXPORTS FAVORABLE TERMS FINANCIAL ASSETS FINANCIAL STATEMENTS FINANCIAL TRANSACTIONS FISCAL BALANCE FISCAL DISCIPLINE FISCAL MANAGEMENT FISCAL POLICY FISCAL POSITION FISCAL SURPLUS FORECASTS FOREIGN ASSETS FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE EARNING FOREIGN EXCHANGE EARNINGS FOREIGN INVESTMENT FOREIGN RESERVES FORMAL EDUCATION GDP GDP PER CAPITA GLOBAL ECONOMY GOVERNANCE ISSUES GOVERNMENT ACCOUNTS GOVERNMENT EXPENDITURE GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT GROSS REVENUES HUMAN CAPITAL HUMAN DEVELOPMENT HUMAN RESOURCE ILLITERACY IMBALANCE IMPORT IMPORTS INCOME INCOME FLOWS INCOME TAX INCOMES INDUSTRIALIZATION INFLATION INFLATION DIFFERENTIAL INFRASTRUCTURE INVESTMENT INSTRUMENT INTERNATIONAL AUDITING STANDARDS INTERNATIONAL BANK INVESTING INVESTMENT ACCOUNTS INVESTMENT PROGRAM INVESTMENT PROJECTS LEGAL FRAMEWORK LEVEL OF COMMITMENTS LIQUIDITY LOW-INCOME LOW-INCOME COUNTRIES MACROECONOMIC RISKS MARKET PRICES MOBILIZATION OF RESOURCES MODEL CONTRACTS MONETARY FUND NATIONAL SAVINGS NATURAL RESOURCE NATURAL RESOURCES OIL BOOM OIL EXPORT OIL EXPORTER OIL EXPORTING COUNTRIES OIL EXPORTS OIL PRICE OIL PRICES OIL PRODUCING COUNTRIES OIL RESOURCE OIL RESOURCES OIL REVENUE OIL REVENUES OIL-EXPORTING COUNTRIES PAYMENT OBLIGATIONS PAYMENT ORDER POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL STABILITY POOR GROWTH PERFORMANCE POVERTY REDUCTION PRIMARY COMMODITIES PRIVATE CAPITAL PRIVATE CONSUMPTION PRIVATE HOUSING PRIVATE INVESTMENT PRODUCTION INPUTS PRODUCTIVITY PROFIT SHARING PROFITABILITY PUBLIC AGENCIES PUBLIC ENTERPRISES PUBLIC EXPENDITURE PUBLIC FINANCE PUBLIC FINANCE LAW PUBLIC FINANCES PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SERVICES REAL EFFECTIVE EXCHANGE RATE REAL EXCHANGE RATE REAL EXCHANGE RATE APPRECIATION REAL GDP REAL SECTOR RECURRENT COST RECURRENT EXPENDITURE RENTS RESERVE RESERVE FUND RESERVES RESOURCE ALLOCATION RESOURCE MOVEMENT EFFECT RESPONSIBILITIES RETURN SALE SALES SAVINGS RATE SECURITIES SHAREHOLDER SLOWDOWN SOURCES OF INCOME STATE ENTERPRISES STATUTORY REQUIREMENT STRUCTURAL ADJUSTMENT SUPERVISORY BOARD SURPLUSES TAX TAX OBLIGATION TAX REVENUES TECHNICAL ASSISTANCE TOTAL EXPORTS TOTAL REVENUE TRADE SECTORS TRADING TRADING PARTNER TRADING SYSTEM TRANSPARENCY TREASURY TREASURY INVESTMENT WEALTH WORLD DEVELOPMENT INDICATOR WORLD MARKET
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World Bank, Washington, DC
Africa | Equatorial Guinea
2012-05-31T15:35:33Z | 2012-05-31T15:35:33Z | 2008-04

Referring to the original context of Dutch Disease, the term refers to the fears of de-industrialization that gripped the Netherlands as a result of the appreciation of the Dutch currency that followed the discovery of natural gas deposits. Expansion of petroleum exports in the 1960s not only crowded out other exports, it actually reduced other exports disproportionately and fueled the fears of dire consequences for Dutch manufacturing. In the case of Equatorial Guinea, the secondary sector represents about 2 percent of the gross domestic product, manufacturing represents less than 1 percent, and oil represents more than 95 percent. The negative impact of the Dutch Disease in this context would be limited given the structure of the economy and on the contrary may even be a good thing because it fuels the structural transformational process of the economy, which is needed in Equatorial Guinea. This paper argues that the ongoing Dutch Disease is a natural and necessary reallocation of resources in the economy of Equatorial Guinea. The magnitude of negative macroeconomic consequences of the Dutch Disease depends on the country's economic structure and stage of development. In a country where the manufacturing sector barely exists or where the non-oil primary sector is structurally deficient, as has been the case of Equatorial Guinea, there is little to fear about the disease. The oil boom is a blessing, given that oil revenues when properly managed can play a special and critical role in overall economic development and poverty reduction in low-income countries. To promote good governance in the management of the country's oil wealth, the government may wish to adhere to clear standards of accountability and transparency; especially by complying with the Extractive Industries Transparency Initiative (EITI++).

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