Energy prices and competitiveness in Latin American emerging economies

Abstract

This paper presents an evaluation of the impact of international oil prices on the competitiveness of three emergent economies in Latin America. We use the methodology of input-output tables for: Peru, Chile and Colombia. Recent outstanding macroeconomic performance of these three emergent countries caused an increase in their demand for energy, which deepened their trade deficit of oil. The effects of high petroleum prices are divided into (a) the impact on costs of new energy prices and (b) the impact on competitiveness. The main conclusion is that energy inputs today constitute the most important cost for industries in Peru, Chile, and Colombia. We recommend some policies for energy efficiency that are consistent with the competitiveness of these three emerging market economies.