How Far Is Economic Development Due To Energy Security?

How Far Is Economic Development Due To Energy Security?

Economic development needs a range of factors to ensure it can be achieved. There must be the capacity within the economy to expand, this is determined by having enough labour, market demand and resources to grow and develop economically. Energy security plays a key role in economic development. Having enough energy allows the economy to enter new sectors i.e. from agriculture to industry. Partially one of the reasons why much of Africa struggles to develop is because it doesn’t have abundant energy resources to generate electricity from or run motor vehicles.

China is a very good example of how economic development has been empowered by an abundance of energy. China has huge reserves of Coal, access to electricity from the three gorges dam and reserves of oil and gas. It has sustained nearly 10% growth in the past 10 or so years, with its energy needs climbing at an alarming rate. China’s industrial sector uses 71% of the countries energy.

Kuwait is another example. For much of its early history (up until the 70s and 80s) Kuwait was a relatively small and low income arab state. The GDP per capita in the 1970s was just around $4000. By 1997 it was $23,000. Standards of living and development has advanced at rapid rate, access to endless amounts of oil has allowed them to set up industry and for peoples homes to have access to electricity. Their citizens also can use cars cheaply. The excess oil they can sell to make further profits. All this growth wouldn’t have been possible without access to abundant energy supplies.

However an abundance of energy resources doesn’t always result in economic development, take for example Gabon in Africa, it produces about 150,000 barrels a day more than it uses but its people are still highly impoverished and economic development is similar to that of other African countries that have no oil. In a sense economic development is not solely affected by access to energy there are many other factors such as the government’s organisation of the economy and the skills and training your workforce has.

Looking at the Gazprom gas cut off of last year this is a good example of how some countries are vulnerable in terms of energy security, and for the period when the gas was turned off much of the Eastern European countries like Romania has people living without central heating, without electricity and the whole country came to a standstill. It can quite easily be assumed that if such a shortage were to be long-term the economic development in many countries (including developed ones) would see a decline in the economic development and the wellbeing of its people.

The main points for supporting that economic development is determined by energy security is by looking at the countries mentioned above that have significant energy security and have had fast and sustainable (so far) economic development. Energy security means countries can continue to grow industry and the economy as well as improving the living standards of its people. Economic development however in some countries that have abundant energy supplies does not always occur; some countries with access to energy security live in relative poverty. Therefore, it can be said that even though energy security is one of the most fundamental properties to a prosperous economy sometimes other factors such as corruption, bad government planning and a poorly skilled workforce can hinder countries from achieving satisfactory levels of economic development.