How to Avoid Dutch Disease? The two primary strategies that can help solve Dutch disease are listed below: 1, Deceleration of domestic currency appreciation The deceleration of currency appreciation is an easier and more viable strategy to prevent the adverse effects of Dutch disease. It can sometimes be achieved by smoothing the spending of revenues earned from the export of natural resources. One of the most common methods to do so is the creation of a sovereign wealth fund. Many developed and developing countries, including Australia, Canada, Norway, and Russia, manage large sovereign wealth funds. Sovereign wealth funds aim to stabilize the inflows of capital into the economy to prevent it from overheating and causing significant currency appreciation. Excess revenues can be spent on education or infrastructure that will help to diversify the economy. 2. Diversification of the economy The diversification of the economy is a strategy that can almost eliminate the negative impact of Dutch disease on the economy. Economic diversification can be achieved by subsidizing lagging sectors of the economy or establishing tariffs to support domestic producers. Source: https://lnkd.in/gre3u4A5 #Sovereignwealthfund #Economicdivwrsification
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