Transcript Global Energy Supply Outlook

Market Economy and Econmic
Growth
Special Lecture on Contemporary
Oct 27, 2004
Ajou University
Yonghun JUNG
Vice President
Asia Pacific Energy Research Centre, Tokyo
Main Points
• Globalization of the world
– Transportation and Telecommunication
– Coercion, Control, Competition
• Economic growth
• Our situation in terms of Resource, Technology
and Market
• China in Perspective
• Energy in Korea
• For you….
Globalization
• Coercion – control – competition
• Democratization
– Technology
– Finance
• Role of international financial organizations
– Information
• Self-sufficiency is the road to poverty
• Non-action can be protected only until
others do see the opportunity somewhere
else
Net Long-Term Resource Flow to
Developing Economies
Declining trend of financial flow to the developing countries.
400.0
350.0
300.0
Billions of USD
250.0
200.0
150.0
100.0
50.0
0.0
1991
1992
1993
1994
1995
1996
1997
1998
1999
-50.0
-100.0
Net long-term resource flow s
Private flow s
Debt flow s
Bond financing
Equity flow s
(Source) World Bank (2001)
Official flow s
Capital markets
Bank lending
Other
FDI
2000
2001
Economic Growth
• Resources: Capital, land, labor
• Technology Development – Solow
Residual
– steam engine, automobile, computer
• International trade
• Market – provide incentives for efficient
allocation of the resources
• Demand
– UK and USA
– American railroad
International Trade
• How have economic structures changed
in the last two centuries?
• Multinatioal:
– scale of economic actors is much greater
– the capacity for the organization of human activity over
time and space has increased
• the quality, quantity, and velocity of information
available to economic actors has increased
• the nature of the products and the nature of
production has changed - new product and tech’y
What is the cause of change?
• Changes in scale, information, organization,
and product
and production alters the nature of the global
economy.
• Technological change is the main cause of
change.
• Why is technological change so important?
•
•
•
•
•
It reduces costs, sometimes in exponential terms
Increase productivity
Change the production process in a more efficient way
Creates new products
Changes the relationship of factors of production- e.g.,
less energy intensive
Our situation
• Resources
– Capital resources: Japan and USA
– Natural resources
– Human resources: chinese student
• Technology
– Basic Manufacturing: Steel, Ship building
– ICT
• Market
– Regulation, Public Monopoly, Entry Barrier
– Reform only on equity not on efficiency
China in Perspective
• Almost two decades of two digit economic growth
– High economic growth for the next two decades
expected – 3 regions
• Resources
– Human resources: Ph.D in the US
– Western region: abundant resources
• Technology
– Space technology
– ICT technology
– Electric appliance technology – “Haier”
• Market
– Liberalization and privatization
– Strong demand base
“Black cat, white cat. It doesn’t matter. All
that matters is that it catches mice”.
- Deng Xiaoping
Energy in Korea
• Rising Energy Demand
• Public Monopoly
• Near 100% import dependence
– Asian premium
• Many big projects
– Sakhalin, Irkutsk, Yakutsk
– Power interconnection
• Domestic energy
– Nuclear, New and renewable
Economics of National Oil Security
Price of Oil
(dollars
per unit)
Domestic
Supply
P2
Vulnerability
Premium
P1
A
B
D
C
Foreign
Supply
P0
World Oil
Price
Domestic
Demand
0
Q1
Q2
Q3 Q4
Sudden Embargo
(Source) Tietenberg (1996)
Q5
Quantity of Oil
(units)
Oil Import Dependence
B98, by region
Regionally different, generally rising
100.0
75.0
50.0
% 25.0
0.0
-25.0
-50.0
-75.0
1995
USA
Northeast Asia
(Source) APERC (1998)
2000
Other Americas
Southeast Asia
2005
China
Oceania
2010
OECD electricity generation costs 1990
(Euro cts/kWh)
85.3
Upper
limit
51.2
4.5
5.9
3.5
3.6
4.0
2.6
3.2
3.6
3.4
3.4
GTCC
PFBC
Lignite
Biomass
waste
Nuclear
Source: Green Paper towards a European Strategy for the Security
of Energy Supply. 2000.
7.2
6.7
Wind
Solar (PV)
Lower
limit
Natural Gas Pipeline Projects
in the NE Asia
China West East Project
Irkutsk-Mongolia-China-Korea or
Irkutsk-China-DPRK-Korea
Sakha
Russia
Irkutsk
Sakha-DPRK-Korea
Sakhalin
Sakhalin-Japan
Tarim
Pendi
Mongolia
DPRK
China
Korea
Japan
For an economist
• Avoid extremes – “balance”
– Max. Speed of the perfectly safe car
– Population scaremongers
– Environmental exhibitionist
• Avoid too simplified causality
– Beaver, Oil crisis
• Look out for the terra incognita
– US patent office
• “Think” yourself
– Extensive and daily reading
– Return to basics
– Question, question, and question (nothing for granted)
• No value in judgement
– Not “bad or goo”, but “appropriate or in appropriate”
“An emotional load of valuation conflicts presses
for rationalization, creating blindness at some
spots, stimulating an urge for knowledge at
others, and, in general, causing conceptions of
reality to deviate from truth in determined
directions.”
Gunnar Myrdal
A lesson
I do not know what I may appear to the world; but to myself I
seem to have been only like a boy playing on the seashore,
and diverting myself in now and then finding a smoother
pebble or a prettier shell than ordinary, whilst the great ocean
of truth lay all undiscovered before me.
Sir Isaac Newton (1642-1727)
From Brewster, Memoirs of Newton (1855)