Poverty and growth impacts of high oil prices: Evidence from Sri Lanka

• Published in: Energy policy Vol. 45; pp. 102 - 111
• Main Authors: Naranpanawa, Athula, Bandara, Jayatilleke S.
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.06.2012; Elsevier; Elsevier Science Ltd
• Subjects: agricultural industry; Applied general equilibrium models; Applied sciences; case studies; Computable general equilibrium model; Crude oil prices; Developing countries; Economic data; Economic growth; Economics; Energy; Energy economics; Energy policy; Exact sciences and technology; Food prices; Fossil fuels and derived products; Fuel; General aspects; General, economic and professional studies; Households; LDCs; Low income; Low income groups; low income households; Manufacturing; Methodology. Modelling; Oil; Oil price; Oil prices; oils; petroleum; Petroleum industry; Poverty; Prices; Sri Lanka; Studies; Sri Lanka; Asia; Oil prices; Computable general equilibrium model; Poverty; Volatility; Socioeconomic study; Developing countries; Petroleum; Case study; Distribution by activities; Economic growth; Price; Economic impact; General equilibrium model
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2012.01.065

The sharp rise in oil and food prices in 2007 and 2008 caused negative impacts on poverty and economic growth in many oil and food importing developing countries. Some analysts believe that these countries are under stress again due to a rise in crude oil prices, to a two-and-a-half year high in March 2011, which has also been partly responsible for higher food prices in recent months. However, there is a limited body of empirical evidence available from developing countries on the impact of high oil prices on growth in general and household poverty in particular. In this study, Sri Lanka is used as a case study and a computable general equilibrium (CGE) approach is adopted as an analytical framework to explore the growth and poverty impacts of high oil prices. The results suggest that urban low income households are the group most adversely affected by high global oil prices, followed by low income rural households. In contrast, estate low income households are the least affected out of all low income households. The energy intensive manufacturing sector and services sector are affected most compared to the agricultural sector. ► Using a general equilibrium model we find poverty and oil price link for Sri Lanka. ► Urban low income households are the group most adversely affected. ► Energy intensive manufacturing and services sectors are affected most.