[marcosdumay]

> Who wants to build a factory in Saudi Arabia even if it weren't unstable? Everything just costs too much because of the oil - land, materials, labor.

So, import all the inputs you can and sell the output on the local market where everything is expensive.

Dutch disease is way more complicated than just "there's too much money coming from this source, the economy is fucked-up". I would really like to see any non-simplified study for a change.

[coliveira]

The real cause of Dutch disease is not economical, but political. Political forces formed from the exploration of oil (and other resources, like banana-producing land in central America) will not allow for the formation of a diversified industry where they will have less ability to control the host country. These political forces are a combination of both external (developed nations) and small minorities that benefit from the maintenance of the status quo.

[pydry]

Dutch disease was named after the Netherlands where the phenomenon was first observed - with North Sea oil. It was a highly valued currency, not politics, that rendered Dutch exports noncompetitive and shrank foreign investment.

[samstave]

Imported Inputs into a GDP will always be SPOF...

Wont they?

Like you need to have serious incentives to import all your inputs.

Else, you are a leeching economy regardless of the value of your goods (Apple)

[marcosdumay]

My comment was about a single factory. In theory all the factories could import all their inputs, because the commodity that is causing the Dutch disease will offset it, but on the micro-level, a company can take advantage of a low average salary yet high costs market that is characteristic of the disease.

[pydry]

So an upstart smartphone manufacturer could take advantage of the high local salaries to manufacture a local brand of overpriced smartphones solely for the local market?

I'm not sure that's viable nor helpful as an idea when you can just import iPhones from China.