Dutch disease. This article is about the economic phenomenon. For the disease affecting elm trees, see Dutch elm disease. In economics, the Dutch disease is the apparent relationship between the increase in the economic development of natural resources and a decline in the manufacturing sector (or agriculture). The mechanism is that an increase in revenues from natural resources (or inflows of foreign aid) will make a given nation's currency stronger compared to that of other nations (manifest in an exchange rate), resulting in the nation's other exports becoming more expensive for other countries to buy, and imports becoming cheaper, making the manufacturing sector less competitive. While it most often refers to natural resource discovery, it can also refer to "any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment".[1] Model[edit] A resource boom affects this economy in two ways.
Pareto principle. The Pareto Principle asserts that only a "vital few" peapods produce the majority of peas. The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity)[1][2] states that, for many events, roughly 80% of the effects come from 20% of the causes.[3] Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896, as published in his first work, Cours d'économie politique.
Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population. It is an axiom of business management that "80% of sales come from 20% of clients".[4] Richard Koch authored the book, The 80/20 Principle, which illustrated some practical applications of the Pareto principle in business management and life.[5] The Pareto principle is only tangentially related to Pareto efficiency.
In economics[edit] Distribution of wealth. World Distribution of Wealth and Population in the Year 2000 The distribution of wealth is a comparison of the wealth of various members or groups in a society. It differs from the distribution of income in that it looks at the distribution of ownership of the assets in a society, rather than the current income of members of that society. Definition of wealth[edit] Wealth is a person's net worth, expressed as: The word "wealth" is often confused with "income". Change of wealth = income − expense. A common mistake made by people embarking on a research project to determine the distribution of wealth is to use statistical data of income to describe the distribution of wealth.
If an individual has a large income but also large expenses, her or his wealth could be small or even negative. The United Nations definition of inclusive wealth is a monetary measure which includes the sum of natural, human and physical assets.[2][3] Statistical distributions[edit] Charity[edit] Wealth surveys[edit] Six Sigma. The common Six Sigma symbol Six Sigma is a set of techniques and tools for process improvement.
It was developed by Motorola in 1986.[1][2] Jack Welch made it central to his business strategy at General Electric in 1995.[3] Today, it is used in many industrial sectors.[4] Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.
It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organization ("Champions", "Black Belts", "Green Belts", "Yellow Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits. Doctrine[edit] Methodologies[edit] Six Sigma.