Paper on Oil Consumption in Developing Countries

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University of tilburg|
Oil consumption in less developed countries|
Empirical study on oil consumption in less developed countries|

Abstract: This paper investigates the relation between GDP and oil consumption in a sample of 71 LDC’s. Two outlier countries with a deviating rate of oil consumption are found. Equatorial Guinea has relatively low oil consumption, while The Seychelles has relatively high oil consumption, in relation to their GDP. After that possible factors that might affect oil consumption are discussed. The presence of oil fields, dependability on oil, inequality, distribution of income and the distribution of GDP and labor between sectors are the main factors that influence oil consumption. After that research is done into the background and history of the countries. The factors that were found are applied to the countries and the conclusion is drawn based on that.|

Table of contents

Chapter 1 – Introduction3
1.2Research goals and structure3
1.4Problem definition3
Chapter 2 – Data analysis4
2.2Sample characteristics4
2.3Data analysis4
Chapter 3 – Internal and external factors affecting oil consumption6 3.1The presence of (un)developed oil fields in a country6 3.2The dependability on oil and the availability of other fossil fuels 6 3.3The degree of inequality or income distribution6

3.4The distribution of labor and capital among the sectors and the 6 output of the sectors
Chapter 4 – Outliers: Equatorial Guinea and The Seychelles7 4.1Equatorial Guinea7
4.1bFactors affecting oil consumption in Equatorial Guinea8 4.2The Seychelles10
4.2bFactors affecting oil consumption in The Seychelles11 Chapter 5 – Conclusion altogether13

1. Introduction

1.1 Motivation
One reason to choose for oil consumption was that it was important to choose something that was not too straight forward or done a million times before. Although oil consumption is considered to be an important figure, it was not a part of this course. It seemed interesting to look at the oil consumption rate of a group of developing countries, especially since this information was not known to the authors prior to this assignment. This meant that it was a stab in the dark for the statistical part. But luckily enough, two outliers were found, one above the average and one below, which was a bonus, because it allows us to write from different perspectives even though the reasons provided are country specific. Additionally, it is believed that the oil consumption is going to change in the coming years. Sustainability and “thinking green” becomes an ever more important issue in the global political arena and there are quite some projects that experiment with different sources of energy. So now that the oil consumption rate is not yet “tempered with” (the other sources of energy are not used on a global scale yet) and still an important economical indicator, it seems like this choice is very relevant at the moment, but nobody knows how long this will stay this way. That is why this assignment is about oil consumption, while it is still important. 1.2 Research Goals & Structure

In this paper the aim is to investigate the oil consumption of developing countries, when compared with the GDP per capita levels of these countries. With the statistical data of several consecutive years it is then possible to identify certain outliers, based on linear regression. The next step is to look for reasons why these countries deviate from the trend that was found in the regression. These reasons will then be put in a separate chapter for each outlier, so that there is...
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