Energy consumption increases very rapidly during economic development. For a developing country lacking in domestic energy resources, projection of the energy balance will show the need to import growing quantities of fuel, causing fear of significant burdens on the balance of payments.1
For the world economy, the burgeoning energy import requirements of the high growth economies in East Asia may or may not pose a challenge. This article considers the linkage between energy imports and economic development. Using an “energy balance” model of Thailand, we simulate the effects of growth, domestic resource expansion, and improvements in energy use efficiency on the growth of energy requirements.
In this paper we develop an energy balance model for Thailand, make projection of future developments and test various alternative strategies to deal with energy dependence. We proceed as follows: Section 2 contains the theoretical structure of our model. Section 3 talks about model estimation and sample period solutions. Section 4 develops the forecast and alternative policy analyses. Section 5 draws conclusions.
Thailand's economy is a good example of the link between energy demand and development. The energy needs and imports of oil of Thailand have grown very rapidly. Figure 1 shows the growth rate of GDP and total final consumption of energy for Thailand in the period 1972–93.