Dutch Disease refers to the economic slowdown that occurs after a country suddenly discovers or earns large revenues from natural resources (like oil, gas, or minerals).
The windfall raises foreign currency inflows, causing the real exchange rate to appreciate. As the currency becomes stronger,
• exports from manufacturing and agriculture become costlier and less competitive, and
• labour and investment shift toward the booming resource sector.
The result is de-industrialisation, rising imports, and long-term economic vulnerability, despite short-term gains from resource wealth.
Often cited examples: The Netherlands (1960s North Sea gas), Nigeria (oil), and Venezuela (oil).
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