engleski

DUTCH DISEASE – THE CASE OF CROATIA: COUNTY LEVEL ANALYSES

The term Dutch Disease was first used by "The Economist" in 1977 to describe the sharp increase in wealth in the Netherlands in the 1960s caused by the discovery of large gas reserves. After the discovery, there were negative effects on the Dutch economy, mainly due to the subsequent appreciation of the real exchange rate. Namely, as revenues from exports increased, the Dutch guilder appreciated, which had a detrimental effect on other industries. Similarly, the rapid growth of the tourism sector may also have potential negative effects. The availability of natural resources (national and nature parks, beaches, etc.) becomes a comparative advantage of the tourism product with subsequent specialization in tourism, neglecting other sectors, with all the negative aspects such as real appreciation of the domestic currency (decline in competitiveness), low growth rates of industrial production, artificially high real wages, reallocation of production factors from the tradable to the nontradable sector, the decline in the relative productivity of the tradable sector, and the like. Such a scenario could occur due to the tourism boom in the Croatian coastal part, and therefore the aim of this work was to investigate possible evidence of Dutch Disease in the Adriatic region of Croatia at the county level. Examining the data and conducting a Granger causality test shows that there are indications of Dutch Disease regarding reallocation of production factors and that policy makers should take the necessary policy decisions to manage the negative consequences in time and prevent slower economic growth in the future.

Dutch Disease, Croatia, county level

nije evidentirano