Dutch Disease: An Empirical Analysis of Norway’s Success and Venezuela’s Stagnation

Itziar Uribarri Rodriguez & Trude Marlen Bakken

Student thesis: Master thesis


The purpose of this paper is to provide insight into the Norwegian and Venezuelan oil sector and investigate the effects that natural resource can have regarding Dutch Disease. The current situation in Venezuela is grim, and one can’t help but contemplate about where it all went wrong. Both Venezuela and Norway have some of the world’s largest oil reserves, however Norway has managed to utilize the oil reserves much better than Venezuela. Ever since the 1960s Norway has experienced a steady increase in their GDP whereas Venezuela’s development has been highly volatile and has not increased sufficiently despite their access to oil. The reasoning for this can be traced and related to the effects of Dutch Disease. Initially, when starting the research behind this thesis, we were expecting to find that Venezuela would be highly affected by Dutch Disease, whereas Norway has managed to avoid it. By looking at the problem and comparing the two situations through a theoretical point of view, as well as an empirical point of view by conducting OLS regression and using the Durbin-Watson model, we found just that, that Norway had avoided the Dutch Disease and Venezuela was heavily affected by it. The
reasons for the results can be difficult to compare, as the two countries are so different in their development and the management of the resources available to them. However, due to their similar situation with natural resource supplies, it was interesting to dig deeper and explore if there were any other similarities regarding the “resource curse”, which in this case was the Dutch Disease

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2017
Number of pages89
SupervisorsJimmy Martínez-Correa