The phenomenon economists call 'Dutch disease' takes its name from the experience of the Netherlands after the discovery of large natural-gas reserves in the 1960s. The mechanism is now textbook: a surge in commodity exports floods the country with foreign currency, driving up demand for the domestic currency and causing it to appreciate. A stronger currency, in turn, makes the country's manufactured goods more expensive abroad and imported goods cheaper at home, squeezing domestic manufacturers on both ends. Resources—labor and capital—migrate toward the booming extractive sector and the sheltered services it feeds, while the tradable-manufacturing base atrophies. When commodity prices eventually fall, the country is left with a hollowed-out industrial sector ill-equipped to take up the slack.

Yet the diagnosis has invited a persistent objection. Critics observe that several resource-rich nations—Norway being the canonical case—have avoided the syndrome despite enormous export windfalls. Norway channeled its petroleum revenues into a sovereign-wealth fund that invests almost entirely abroad, deliberately keeping the foreign-currency inflows from being converted into domestic spending that would bid up the krone. The lesson critics draw is pointed: Dutch disease is not the inevitable consequence of a resource boom but the consequence of how a government chooses to manage one. The currency appreciation that does the damage can be neutralized by sterilizing the inflows, leaving the manufacturing base intact.

The original theorists do not so much dispute this as absorb it. The classic model, they note, was always conditional on the revenues entering the domestic economy; a windfall parked abroad never triggers the appreciation in the first place. What Norway demonstrates, they argue, is not an exception to the mechanism but a confirmation of it—the disease is averted precisely by blocking the channel the model identifies as causal.