Adaptability to energy, production efficiency and the crude oil price: evidence from a small open economy

Abstract

Taiwan is an economy which is highly dependent on energy imports. A change in oil price not only affects the cost of production, but also the economic growth. Since the year 2000, the crude oil price has risen and become an unstable factor for economic development. In response to the rapid rising of emerging economies and the competitive international economic environment, Taiwan is facing a moment of industrial restructuring. Energy-saving technologies and improved efficiency might play important roles. It is necessary for Taiwan to improve its industrial productivity and production technology to contribute to the global warming problem. From crude oil intensity and change in spillover effects of crude oil price, we might detect whether industrial production efficiency and adaptability to energy and production technology improves or not. Based on the input-output table showing the monetary value of inputs to each sector and each row represents the value of each sector's outputs during the periods of 1981 to 2011, the present study employs the industry-related price model and factor decomposition model to investigate the change in Taiwan's reliance on crude oil through crude oil intensity. Although efforts have been made to advance technology and improve energy dependence, the results of this study indicate that imported crude oil intensity and price responsiveness have actually increased. Thus, the speed of improvement in energy technology is insufficient to keep up with the extent of economic growth.

Evaluation of the Adaptability of the Ukrainian Economy to Changes in Prices for Energy Carriers and to Energy Market Risks

“…In particular, the study of the adaptability of the economy to the change in the prices of crude oil by the example of Taiwan [84], the USA [85], China [86], Malaysia [87] and other countries [8] are of considerable interest for scientists. It is important to note that in certain works [84,85] results are presented according to the branches of the economy. At the same time, in our opinion, the methodical approaches to quantitative assessment of the level of adaptation of the economies to changes in energy prices and to risks of energy markets require further development.…”

The Spillover Effects of Investment, Economic Growth and Electricity Consumption: An Application Mathematical Dynamic Industry-Related Models Approach

“…This Journal is licensed under a Creative Commons Attribution 4.0 International License hinges excessively on energy consumption (Bruno and Sachs, 1985;Hamilton, 1983;Davis and Haltiwanger, 2001;Lee, et al, 2002;Hong and Hsu., 2018). Therefore, the stability of energy prices does not only affect production costs but also constitutes a vital factor influencing economic development (Huang et al, 2015a;2015b). How to achieve economic development given these conditions in Taiwan warrants discussion?…”

“…Improved productivity can increase profits by reducing energy consumption while achieving the objective of economic growth (Heintz et al, 2009;Ramey, 2011). Huang et al (2015a;2015b) found that following its entry into the World Trade Organization, Taiwan has exhibited increasingly high imported-energy intensity and considerably heightened sensitivity to energy prices, implying the Taiwanese economy has become more restricted by its reliance on energy. Achieving sustainable economic development in a country necessitates advances in R&D technologies and equipment investment, which enable a country to adapt to changes in the international economic environment and realize industrial restructuring (Hong et al, 2017).…”