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Fostering Sustainable Growth in Ukraine by Stephan von Cramon-Taubadel download in pdf, ePub, iPad

To face this strain, some combination of extraordinary moderation in demand growth and extraordinary acceleration in production will need to take place. Yet resources must be managed responsibly and energy efficiency should be encouraged. Beyond its direct contributions to the economy, energy is also deeply linked to other sectors in ways that are not immediately obvious. In other words, industry had better places in the world than North Dakota to invest shareholder dollars and earn a return. Further, energy industries generate relatively few direct jobs per unit of economic output, adding to the pressure for governments to spend more on entitlement programmes.

Further China will increase the

However, balancing energy prices, energy security and the environment requires trade-offs between job creation and overall productivity in the energy sector. To do this it must catalyse investment and innovation which will underpin sustained growth and give rise to new economic opportunities. As a result, governments can become locked into a pattern of increasing spending that is fiscally unsound when prices fall. Think, for instance, about maintenance and troubleshooting, and it is easy to realize how useful a strong local industrial base can be.

If China, India and other emerging markets continue to expand, of course the demand for energy will continue to explode, putting enormous upwards pressure on prices into the foreseeable future. Attracting and maintaining an efficient energy infrastructure requires providing investors with ongoing opportunities to earn an adequate return on investment. Today, they should establish some degree of processing adding value to the raw materials.

Strategies for greener

But I would like to call attention to another potential benefit of the pre-salt fields, concerning the wealth that can be created onshore by the investments required to tap these offshore resources. The first lever would be the creation of oil- and gas-based industries that use energy as fuel and feedstock. Also, an aspect of our growth prospects that is often poorly appreciated is the need to invest in the refining business.

Further, China will increase the share of cleaner energy sources such as natural gas, nuclear, hydro, wind and solar. Strategies for greener growth need to be tailored to fit specific country circumstances. The final lever involves striking a delicate balance between raising living standards, creating local competitive advantage and protecting the environment. The latter term seems to indicate that although the downturn was deep, the recovery will be proportionately stronger, provided of course that appropriate policies are followed.

By contrast, most emerging markets have enjoyed a V-shaped recovery. We all understand how globalization and market liberalization have underpinned these developments, but we must not lose sight of the crucial enabling role played by the energy sector. However, capital costs are currently extremely low because of the depressed state of the global financial system. Rising energy prices took purchasing power away from consumers, particularly from lower-income groups.