Energy consumption trends in high growth Asian economies before and after 1986

In 1986, world oil prices declined sharply. Lower oil prices have been favourable to economic growth and price stability in Asia. However, oil consumption has also been growing rapidly in developing Asian countries including those dependent on imported oil. The increasing dependence on oil as a source of energy since 1986 is a striking reversal of the previous trend. In their pursuit of rapid industrialization, Asian countries have neglected energy conservation and diversification strategies. Unless energy policy is redirected, countries like Korea, Thailand and the Philippines could be seriously hurt by a sharp rise in oil prices. An increase in oil prices is almost inevitable in the next few years.     

External Debt and Prospects for Minerals-exporting Developing Countries

This article examines the extent to which selected non-fuel minerals-exporting developing countries can rely on their traditional source of hard-currency earnings to promote future economic growth and to facilitate payments for interest and amortization of accumulated debt. The countries (and minerals) under consideration are: Chile (copper), Bolivia (tin) and Jamaica (bauxite). Incorporated into the study are sets of alternative assumptions regarding global demand for these minerals to the end of the century, market shares, mineral prices, external debt levels and interest rates. More specifically, the study examines the likely ranges of future export revenues of these countries from these minerals in the years 1990 and 2000, and the role that these future export revenues may play in servicing external debt.     

Environmental policy stringency,renewable energy consumption and CO2 emissions: Panel cointegration analysis for BRIICTS countries

ABSTRACT

The aim of this paper is to investigate the relationship between environmental policy stringency and CO₂ emissions in BRIICTS (Brazil, Russia, India, Indonesia, China, Turkey and South Africa) for the period 1993–2014 after controlling for renewable energy, fossil energy, oil prices and income. We believe that this is the first attempt to use the recently OECD-developed environmental policy stringency index to test the effectiveness of environmental stringency policy in reducing CO₂ emission in these countries. Applying the Panel Pooled Mean Group Autoregressive Distributive Lag (PMG-ARDL) estimator, we found an inverted U–shaped relationship between environmental policy stringency and CO₂ emissions. This suggests that initially strict stringent environmental policy does not lead to improvements in the environment but after a certain level or a threshold point, environmental stringency policy leads to improvement in environmental quality. Renewable energy consumption was negatively related to CO₂ emissions while fossil energy consumption and real oil prices and income were positively and significantly related to CO₂. Our findings suggest that strengthening the stringency of environmental policies and promoting renewable energy are effective ways of preventing environmental degradation in BRIICTS countries.     

Is Russia suffering from Dutch Disease? Cointegration with structural break

This paper examines whether Russia suffers from “Dutch Disease” by investigating the real appreciation of the Russian ruble and the relative de-industrialization in the post Soviet Union-era. According to UNDP Russia Report (2009) the Russian economy has indeed exhibited some typical symptoms of “Dutch Disease” in recent years as upward movements in oil prices are accompanied by a reduction in the share of manufacturing output and an increase in service prices. Furthermore, the report claims that these developments may trigger a recession in Russia in the future. Using Gregory and Hansen (1996a, 1996b) and Arai and Kurozumi (2007) structural break cointegration frameworks, our results indicate that the Russian economy exhibits some typical symptoms of “Dutch Disease”. Although the diagnosis is not certain, the risk is evident. Hence, policies that would make the Russian economy more robust to shocks in the oil price need to be carefully designed and implemented.     

Long-term trends in the Real real prices of primary commodities: Inflation bias and the Prebisch–Singer hypothesis

In his recent article on measuring the long-term trends in the real prices of primary commodities, Cuddington (2010) extends in several important respects our earlier efforts (Svedberg and Tilton, 2006) to correct real commodity price trends for biases in the Consumer Price Index and other deflators. First, he argues for a log-linear relationship between prices and time. Second, he proposes a simple and quick method for obtaining corrected price trends from the published but uncorrected estimates. Finally, he illustrates, for the case of copper and presumably for many other commodities as well, the difficulties of obtaining real price trends significantly different from zero when the log values of the price data contain a unit root, requiring the use of difference stationary models.We welcome these insights, which should improve and make easier efforts to estimate correctly real commodity price trends over the long run. We would stress, however, that it is still important to correct for the biases in inflation indices, notwithstanding the failure of difference stationary models to obtain long-run real price trends (both corrected and uncorrected) significantly different from zero.     

Oil Exploration in the Developing Countries: Poor Geology or Poor Contracts?

The present geographic pattern of investment in oil and gas exploration is skewed away from the developing countries and towards the developed countries. This paper presents statistical data relevant to this situation, analyzes its causes, and proposes solutions. The paper argues that this phenomenon is largely distributional, arising from continuing difficulties in reaching 'equitable' contractual agreements regarding the distribution of risks, benefits and costs, compounded by uncertainity about contract sancity. Both parties could gain if contracts were designed, on a country-by-country basis, to (1) take better advantage of comparative ability to assume different categories of risk; (2) ensure efficient project management; and (3) be more self-enforcing.     

CURRENT REFINERY PROBLEMS AND ISSUES IN PETROLEUM IMPORTING DEVELOPING COUNTRIES

This article discusses the problems facing refinery operations in developing countries and possible solutions to them. The topics covered include security of crude oil supply to the developing countries; difficulties encountered in development of indigenous expertise in refinery operation; refinery capacity and the special problems of maintenance and repair facing refinery operators in the developing parts of the world; and the potential for improved refinery operation through increased international co-operation.     

The interest of OECD countries in ICAs and the Common Fund

This article explains that the nature of commodity price determination and the characteristics of the link between commodity prices and prices of manufactured goods are such that they have an inflationary and recessionary impact on the world economy. Subsequently, it argues that International Commodity Price Agreements (ICAs) and the Common Fund are not only in the interest of developing countries but are also in the vital interest of developed countries. They assist in stabilizing economic activities and sustaining recovery at a higher rate of growth of output and employment in these countries. Nevertheless, to be effective for these purposes, ICAs should cover a wide range of commodities and adequate financial resources should be available to the First Account of the Common Fund.     

Road transport fuel demand in the LDCs

Over the last decades, oil consumption in the developing countries hus been increasing rapidly. Road transport has accounted for most of this increase in demand. It is the thesis of this paper that future growth in oil demand in developing countries will occur mainly in the road transport sector and that this growth will be surprisingly strong. Estimated income and price elasticities for several developing countries are presented and forecasts for oil consumption in road transport in the developing countries up to 2010 are given.     

Oil spills on other commodities

This paper examines the effect of crude oil prices on the prices of 35 internationally traded primary commodities for the 1960–2005 period. It finds that the pass-through of crude oil price changes to the overall non-energy commodity index is 0.16. At a more disaggregated level, the fertilizer index had the highest pass-through (0.33), followed by agriculture (0.17), and metals (0.11). The prices of precious metals also exhibited a strong response to crude oil price. In terms of individual commodities, the estimates of the food group exhibited remarkable similarity while those of raw materials and metals gave a mixed picture. The implication is that if crude oil prices remain high for some time, as most analysts expect, then the recent commodity price boom is likely to last much longer than earlier booms, at least for food commodities. The other commodities, however, are likely to follow diverging paths. On the methodological side, the results show that price indices, while providing useful summary statistics, they need to be supplemented by individual commodity analysis.     

The Global Consultation on Safe Water and Sanitation for the 1990s

The Global Consultation on Safe Water and Sanitation for the 1990s was an outstanding opportunity for participants from 102 developing countries along with over 60 External Support Agencies (ESA) to assess the experiences of the International Drinking Water Supply and Sanitation Decade 1981–1990 (IDWSSD) and to reach a consensus on strategies and approaches for complete and effective coverage of water supply and sanitation. The resulting New Delhi Statement summarizing the conclusions and recommendations of the Global Consultation was presented to the General Assembly in autumn 1990. As one of the positive results, the New Delhi Consultation agreed that the UN Agencies and other bodies should continue the coordination work of the Steering Committee for Water Supply and Sanitation. It also provided a basis for the restructuring and consolidation of the new Collaborative Council for Water Supply and Sanitation, which will form a continuous consultative body for all UN agencies, NGOs, other external support agencies and developing countries concerned with the water sector.     

Trials and Tribulations of Third World Petroleum Development: Lessons and Advice for Prospective Producers

This paper presents a variety of lessons for governments of developing countries about how to begin to operate as new oil producers in the world petroleum market. Lessons, drawn from the recent experiences of currently producing LDCs, are identified for each stage of the industry from exploration and development through procurement and supply to refining and marketing.     

ASPECTS OF PETROLEUM TRANSPORT IN DEVELOPING COUNTRIES

Dramatic changes in the institutional structure of the international oil industry in recent years have created new responsibilities and opportunities for developing countries in petroleum transport. The article discusses the prospects for changes in the ownership/control pattern of seaborne oil movements and the need for both oil producing and oil importing developing countries to pursue national plans to acquire shipping tonnage and expertise, without being deterred by the present depressed conditions of the world shipping industry. Drawing from the experience in India, it deals with some features and problems of petroleum transport by sea, pipeline, rail and road. It stresses the importance of co-operation among developing countries through common operation of deep-water terminals and large size tankers to optimise transport costs.     

Expanding the Range of Choice in Water Management: An Evaluation of Policy Approaches

This paper examines the ‘range of choice’ concept in water management. Although many efforts have been made to design policies that broaden the consideration of water resources alternatives, the experiences gained from these policy experiments have not been adequately assessed. What insights might American policy approaches offer for developing countries? To address this question, four general policy types were identified and compared: (1) comprehensive single-objective policies; (2) comprehensive multiple-objective policies; (3) specific non-structural policies; and (4) specific technological policies. Case studies of each approach revealed that effective institutional development occurs when policies are: (1) stated in clear and specific language; (2) modified as experience is gained; (3) adequate in terms of statutory and administrative authority; and (4) subject to an orderly process of public and judicial review. The most successful policy efforts to date have involved specific alternatives, while multiple-objective policies have encountered the most difficulties. Common institutional problems are identified, and their potential relevance for developing countries is discussed.     

Causes of energy poverty in a cold and resource-rich country: evidence from Kazakhstan

Kazakhstan is an upper-middle-income country and one of the coldest countries in the world with rich energy resources and energy prices considerably lower than in developed countries. This paper presents the first comprehensive overview of household fuel use in Kazakhstan and assesses the causes and extent of energy poverty using the Households Living Conditions Survey dataset of 12,000 households. The results show that there is an overwhelming reliance on coal in Kazakhstan: 40% of all surveyed households use coal for heating, cooking and other needs. In general, liquefied petroleum gas is mainly used for cooking, coal and firewood for heating, while electricity is rarely used for heating. Energy poverty was less prevalent in oil and gas rich regions, due to low gas prices and higher income levels in those regions, while households located in the North Kazakhstan, Central and East Kazakhstan mainly suffer from lack of cleaner fuel options, income poverty, longer and colder winters and consequently energy affordability. Despite low energy prices in Kazakhstan, the results demonstrate that 28% of surveyed households spend more than 10% of their income on energy. Gas and district heating infrastructure coverage and income inequality across its regions contributed the most to energy poverty in Kazakhstan. Energy prices are regulated and indirectly subsidised. Removing energy subsidies alone may worsen energy affordability of households. Offering direct subsidies to cover part of the energy expenditures may not fully solve the problem, but subsidies, interventions for efficient technologies and fuels, dwelling energy-efficiency improvements are necessary.     

Long-term trends in the Real real prices of primary commodities: Inflation bias and the Prebisch-Singer hypothesis

Following the Boskin et al., (1996) report, it became widely recognized that price indexes in the U.S. and elsewhere overstate inflation. Svedberg and Tilton (2006) highlighted that this inflation bias may have important implications for estimated long-term trends in nonrenewable resource prices. ST construct an inflation-bias corrected CPI (and PPI) for the U.S. and use their corrected deflator(s) to define a so-called ‘real real’ price of copper. Their ‘real real’ price of copper is then used to re-estimate long-term trends in real copper prices. This paper proposes a quick method for obtaining inflation-bias-corrected estimates of long-run trends in real primary commodity prices directly from estimates in the published literature. Our approach obviates the need re-do existing empirical studies using a corrected or ‘real real’ price of nonrenewable resources. The two approaches are mathematically equivalent.     

Commodity currencies and currency commodities

There is a large literature on the influence of commodity prices on the currencies of countries with a large commodity-based export sector, such as Australia, New Zealand, and Canada (“commodity currencies”). There is also the idea that because of pricing power, the value of currencies of certain commodity-producing countries affects commodity prices, such as metals, energy, and agricultural-based products (“currency commodities”). This paper merges these two strands of the literature to analyze the simultaneous workings of commodity and currency markets. We implement the approach by using the Kalman filter to estimate jointly the determinants of the prices of these currencies and commodities. Included in the specification is an allowance for spillovers between the two asset types. The methodology is able to determine the extent that currencies are indeed driven by commodities, or that commodities are driven by currencies, over the period 1975–2005.     

The vulnerability and resilience of small island developing states in the context of globalization

In spite of the wide diversity in the economic performance of small island developing states (SIDS), the apparent prosperity of several SIDS has entailed a global misrepresentation of the economic situation of these countries. While their vulnerability to natural disasters is not denied, the general risk of economic marginalization that many SIDS face in the context of globalization may not have received sufficient attention. The paper attempts to highlight what matters most in the consideration of the economic vulnerability of SIDS and in the debate to prevent their marginalization. It examines the main types of external shocks to which SIDS are vulnerable, and discusses the economic handicaps that are fundamental causes of this vulnerability. Economic specialization (with the predominance of international trade in services) is then a central notion in the analysis of island vulnerability: a better specialization, which may involve diversification and always implies greater international competitiveness, can reduce the exposure or vulnerability of SIDS to external shocks, and induce greater economic stability in these countries. Hence the importance of developing policies to circumvent the specific handicaps of islands and facilitate the realization of new trading opportunities through an emulative use of globalization forces.     

Direct and indirect benefits of improving river quality: quantifying benefits and a case study of the River Klang,Malaysia

This paper describes the potential benefits to be gained from improving the quality of urban rivers and evaluates the methods commonly used to quantify such benefits. The difficulties encountered in quantifying non-use benefits in developing countries are discussed with particular reference to the River Klang that drains the urban conurbation of Kuala Lumpur in Malaysia, where as in many other locations in developing countries the only potential benefits are the most difficult to justify, namely indirect and non-use benefits.