Divisia decomposition method and its application to changes of net oil import intensity

Hua Liao (), Zhao-Yi Xu and Ce Wang ()

No 55, CEEP-BIT Working Papers from Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology

Abstract: The existing oil import dependence index cannot exactly measure the economic cost or scales, and it is difficult to describe the economical aspect of oil security. To measure the foreign dependence of one country's economy and reflect its oil economic security, this paper defines the net oil import intensity as the ratio of net import cost to GDP. By using Divisia Index Decomposition, the change of net oil import intensity in five industrialized countries and five newly industrialized countries during 1971¡ª2010 is decomposed into five factors: oil price, oil intensity, oil self-sufficiency, domestic price level and exchange rate. The result shows that the dominating factors are oil price and oil intensity; moreover, the newly industrialized countries have higher net oil import intensity than industrialized countries.

Keywords: net oil import intensity; Divisia index; decomposition method (search for similar items in EconPapers)
JEL-codes: Q40 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2013-11
New Economics Papers: this item is included in nep-ene and nep-int
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Published in Transactions of Tianjin University.

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