Genuine savings as a measure of sustainability and its relation to the Dutch Disease

Purpose

This paper examines the concept of sustainability by revisiting the genuine savings (GS) metric and its relationship with the Dutch Disease to see if Dutch Disease not only compromises GDP growth in resource-rich countries but also compromises long-term sustainability.

Design/methodology/approach

Using data that spans a 100-country full sample as well as subsamples categorised as resource-rich and non-resource-rich over the 1990–2019 period, regression analysis was performed using pooled OLS and fixed effects estimation approaches. These findings are corroborated through a robustness check employing the generalized method of moments estimation technique.

Findings

We find evidence to support the hypotheses that Dutch Disease negatively impacts GS and both manufacturing and service sectors have a negative impact on weak sustainability in resource-rich economies.

Research limitations/implications

The estimated cost of carbon dioxide damage or returns to human capital investments has implications on genuine saving rate changes and associated policy responses for countries.

Originality/value

This paper adds to the existing empirical work by assessing the relationship between GS and Dutch disease using specific country groups, which has not been done previously.