This thesis looks at the role of the 2003-2013 primary commodity boom in South American deindustrialization. I hypothesize that the boom has led to deindustrialization throughout the region because of the ‘Dutch disease,’ a process by which a boom in the natural resource sector causes the manufacturing sector to decline due to resource movement between sectors and real exchange rate appreciation. Using a panel dataset of 106 lower-middle and upper-middle income countries from 1995 to 2019, I analyze the extent to which a greater share of primary commodities in a country’s export basket has led to (a) lower manufacturing value added and (b) higher real exchange rates, both around the world and specifically South America. I find evidence that the Dutch disease has led to higher real exchange rates in South America, but insufficient evidence that the Dutch disease has led to lower manufacturing value added in the region.
Global and International Studies
Melmed, Gabriel, "Resource Boom, Manufacturing Bust: The Dutch Disease and Deindustrialization in South America" (2021). Senior Independent Study Theses. Paper 9350.
Deindustrialization, South America, Dutch disease
Bachelor of Arts
Senior Independent Study Thesis
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