The “Dutch Disease” phenomenon refers to a pattern of resource reallocation first observed in connection with the earliest discoveries of North Sea oil and gas in the late 1950’s. The nickname was probably suggested in the 1970’s, and the model was formally elaborated by Corden and Neary in 1982. Theory gives no indication that the precise nature of the booming export sector should influence the eventual outcome. Nonetheless, the investigation reported here suggests that the effects of a boom originating in mined metals may differ from those that typically follow a boom originating in hydrocarbons. Based on a survey of pooled annual panel data for 15 countries, we found that the effect of metallic ore exports on manufactured exports appeared to be significantly positive, in contrast to the predictions of the Dutch Disease model and the recorded experience of countries like Holland exporting oil and natural gas. Considering why this might be the case, alternative explanations are suggested that include a) metals as an input into manufacturing, b) explanations involving differences in transportation costs and need for onsite processing c) classification overlap between manufacturing and the refinement of metallic ores. At present we are unable to discriminate between the alternatives, but it remains an important issue to investigate because of their radically different implications with regard to the linkage between the extractive sector and the other sectors comprising GDP. Only in case a) can a solid case be made that metals exports are more compatible with broadly-based industrial development than fuel exports.
