The dangers of ‘Dutch disease’ in Latin America

Harvesting the soy bean crop in Brazil in 2013 (photo:dpa)
Harvesting the soy bean crop in Brazil in 2013 (photo:dpa)

A number of Latin American economies have boomed as world prices of their export commodities have increased. But where governments are heavily reliant on one or two commodities and have not prepared for prices to fall, they are at risk of what has been labelled ‘Dutch disease’.

A SIX-fold increase in oil prices in the last decade gave Venezuela an unprecedented bonanza – almost US$1 trillion in revenues.

Under the charismatic leadership of President Hugo Chavez (1999-2013), it propelled Venezuela on to the world stage. Now Mr Chavez is dead, Venezuelan oil output is declining and energy prices are no longer rising.

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