A resource boom lifts the exchange rate and wages, hollowing out other tradable sectors.
Named by The Economist in 1977 for the Netherlands after the Groningen gas find. Manufacturing employment fell as the guilder rose — the boom sector's success is what damages the others.
In practice
- A region where a large plant raises local wages finds its restaurants, hauliers and builders unable to recruit at any price.
- A city where finance salaries set the rent means every other employer in it is competing for staff who cannot afford to live there.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys