On Dutch disease - a reply to Raghbendra Jha's comments

Comments on Raghbendra Jha’s reply to my comments on his article “India and the Copenhagen summit”, 9/09/2009, http://www.eastasiaforum.org/2009/09/04/india-and-the-copenhagen-summit/

You only mentioned the influx of foreign currency as capital inflow, you have not mentioned the need to use that foreign exchange to: 1. purchase the technologies and equipment necessary to reduce emissions without slowing economic growth, 2. to import other urgently needed technologies, capital goods and inputs by developing countries, 3. why can't a developing country use any foreign exchange to invest abroad, if appreciation is a concern?

The Dutch disease has been over blown out of proportions in many potential real scenarios. It partly reflects a poor understanding of economic development in its totality and to have only focused on effects of part of trade on exchange rate. It ignores so many things and is therefore is so incomplete to be used as a useful guide to economic development policy.

So I am afraid that the concern for appreciation is completely unnecessary and even unfounded. It is likely to reflect a poor understanding of the working processes of reducing emissions and the needs of many developing countries for more foreign currency to improve their economic conditions.