Dutch Disease in Algeria: An empirical analysis of the impact of the hydrocarbon sector on deindustrialization (2000–2018)
Dutch Disease in Algeria: An empirical analysis of the impact of the hydrocarbon sector on deindustrialization (2000–2018)

Summary/Abstract: This empirical study investigates the extent to which Algeria's predominant hydrocarbon sector has contributed to the decline of the tradable sectors (agriculture and industry) in favor of the non-tradable sector. indicative of the Dutch Disease phenomenon. Utilizing a standard econometric modeling approach. we examine the presence of the spending effect associated with Dutch disease. manifested through the negative relationship between the tradable sector and the booming hydrocarbon sector. as well as the non-tradable sector. Additionally, we analyze the resource movement effect. evident in the inverse relationship between the non-trade sector and the other sectors. Our model reveals that the Dutch Disease phenomenon has permeated the Algerian economy during the study period from 2000 to 2018. aligning with the theoretical underpinnings of Dutch Disease theory through the presence of both spending and resource movement effects. Specifically, we construct an econometric model utilizing GDP components that realistically reflect the existence or absence of Dutch Disease through the emergence of the inverse relationships stipulated by theory.

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