A three region model of energy, international trade and economic growth

Journal Article · Tue Sep 01 04:00:00 EDT 1981 · Int. J. Policy Anal. Inf. Syst.; (United States)

OSTI ID:6805386

Manne, A S; Kim, S; Wilson, T F

Although the developing countries now consume a relatively small fraction of the world's energy, this fraction could grow rapidly over the coming decades. By comparison with the already industrialized nations, the less developed countries (LDCs) have high population growth rates and high income elasticities of demand for commercial energy. Moreover, if today's North-South income disparities are to be reduced, the LDC's per capita incomes will have to grow more rapidly. Taken together, these factors imply a substantial increase in the LDC demand for energy. For example, the WAES study projected that the developing countries' share of the world's commercial energy consumption would grow from 15% in 1972 to 25% in the year 2000. Our three-region model is designed so as to emphasize the key role played by these substitution elasticities-and the uncertainties over their numerical values. The approach avoids several of the defects that are inherent in ''bottom-up'' methods of projection such as those employed by WAES and the World Bank. Price movements are calculated so as to eliminate ''gaps'' between the supply and demand for energy. Import and export prices of non-energy products are adjusted so as to limit trade gaps to plausible rates of capital transfers. Despite these advantages of logical consistency, there are inherent difficulties in this type of global modeling. With a ''top down'' approach, aggregation can lead to serious difficulties. Large-scale models are time-consuming, expensive to construct, and are frequently incomprehensible to outsiders. It is essential that there be a two-way flow of information between global models and those that contain sufficient detail so as to be meaningful to individual policy-making units.

• Research Organization: Department of Operations Research, Stanford University, Stanford, CA 94305
• OSTI ID: 6805386
• Journal Information: Int. J. Policy Anal. Inf. Syst.; (United States), Journal Name: Int. J. Policy Anal. Inf. Syst.; (United States) Vol. 5:3; ISSN IPASD
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
292000* -- Energy Planning & Policy-- Supply
Demand & Forecasting
DEVELOPING COUNTRIES
ECONOMIC ELASTICITY
ENERGY CONSUMPTION
FORECASTING
SUPPLY AND DEMAND