Has Canada Caught Dutch Disease?

Issue The ter m ”Dutch Disease” originally referred to the adverse effects of the large North Sea natural gas discoveries on the Dutch manufacturing sector and economic growth. Dutch Disease is now an economic term that refers to the general ef fects of a commodity export boom on an economy. The booming sector drives up the cost of labour and other non-tradable inputs, which makes other tradable sectors, particularly the manufacturing sector, less competitive. Because the manufacturing sector tends to be more innovative than others, this can lead to permanently lower rates of growth in the economy. In this policy brief we examine Dutch Disease in Canada. Given the sustained growth in Canadian oil and gas exports, we investigate whether Canada has contracted Dutch Disease and whether various Canadian manufacturing industries have been affected. Policy Implications and Conclusions