THE DUTCH DESEASE IN BRAZIL: SYMPTOMS AND EFFECTS

Abstract

Since 1977, when The Economist first coined the expression dutch disease, to characterize the process of deindustrialization, caused by the entry of international reserves by the exports of an abundant natural resource, it has been very controversial. This paper revises the literature related to the dutch disease and examines whether it would be occurring in Brazil. This subject has provoked much interest in Brazil due to the overvaluation of its currency and the recent discovery of huge off-shore oil reserves, named as pré-sal. This paper presents its definition, its main symptoms and consequences, with emphasis in the dutch episode, which give name to this phenomenon. Nowadays, there are two diverging views about its existence in Brazil: those who support it, based on the some symptoms of the disease and its opponents, based on the evolution of the share of the industry on GDP. Having this discussion as a background, and based on data from 2005, it sought to identify its presence on Brazil. The results, based on the shares of industry on GDP and exports, show that the dutch disease would not be present in Brazilian economy, as there was no significant changes of the participation of the industrial sector on GDP, despite the marked process of reprimarization of Brazilian exports.