As costs for energy has trended downwards some observers have declared and projected special competitive advantages for a number of oil consuming developing nations. But is this true ? Or is it the cse that as all countries derive the common benefits then none will be occupying a uniquely advantageous position
Hi Silburn, interesting but difficult question. I think that developing economies are, in general, oil-consuming countries. We can perhaps differenciate these economies between oil-producers and non-oil-producers. This difference is important as the impact of changes in oil price is different for each group. Right now, for instance, countries whose economy depend on oil exports is suffering the prices reduction whereas the ones that are not oil producers are "enjoying" that low price. In any case I do not think that the change in energy prices (which is permanent) could give a sustained competitive advantage. Rather I think that countries that understand the importance of energy in their economies and seek to be more energy efficient would enjoy such and advantage. The energy-intensity indicator, for example, would help to answer this.
That is interesting. I think you can look into this paper.
Jiménez-Rodríguez*, Rebeca, and Marcelo Sánchez. "Oil price shocks and real GDP growth: empirical evidence for some OECD countries." Applied economics 37.2 (2005): 201-228.
For detail version, you can also look at ECU Working paper of the same authors.
With the downward trend in energy costs, the oil consuming nations with net import have 'momentary' advantage of getting a precious raw material (i.e. crude) cheaply to rapidly develop their economy. Although the competitive advantage obviously exists, but I would say it is not unique and may also not be sustainable.The sustainability or otherwise depends on how much of non-oil dependent sectors of the economy they are able to quickly ignite before price start to creep up to a new level of equilibrium, perhaps never as high as it was few years back. Ironically, such nations often soon forget that the low price swing is not for the long run (same error their exporting counterparts make during period of consistently high price), hence tend to blow away any perceived advantage.
Agreed Juan / Boye,
Unless the beneficial window afforded by the lowered prices for oil-consuming economies is used in create a differential advantage, then these economies will not enjoy any special advantage vis-à-vis their international rivals
Saleh,
Appreciate the link. paper is actually on RG
https://www.researchgate.net/publication/24075596_Oil_Price_Shocks_and_Real_GDP_Growth_Empirical_Evidence_for_some_OECD_Countries
Interesting Finding: "We find that oil price increases have an impact on GDP growth of a larger magnitude than that of oil price declines, with the latter being statistically insignificant in most cases."
Silburn
Article Oil Price Shocks and Real GDP Growth: Empirical Evidence for...
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