Economic Growth, Oil Consumption and Import Intensity: Factor Decomposition of Imported Crude Oil Model Approach

Cheng-Yih Hong, Chen-Jung Hsu

Abstract


Taiwan became a member of the WTO in 2002. Trade is the engine of growth in Taiwan, accounting for nearly 96.41% of GDP in 2016. Taiwan's economy is highly export-oriented. On the other hand, Taiwan depends on imports for near 98 percent of its energy consumption. This paper analyzes the changes in the intensity of crude oil imports between 1981 and 2016. This research sets several main topics: i) Estimating the imported crude oil intensity of final demand for a quantity analysis. ii) Measure of imported crude oil intensity of final demand. iii) Factor decomposition model for the imported crude oil intensity of final demand. iv) The study could provide an understanding of the properties and production technologies of various industries. The result shows that imported goods intensity is the largest in the crude oil and gas sector. Changes in imported crude oil intensity factors mainly from domestic production structure and final demand structure.

Keywords: Economic growth, Imported Crude Oil intensity, Factor Decomposition

JEL Classifications: C51, F14, Q43


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