Energy Trends in Transition Economies and Their Implications for Cuba

A. F. Alhajji, PhD and Terry L. Maris, PhD

Energy is one of the principal sectors affected when countries move toward market economies. Historically, transition to market economies has had a profound impact on supply, demand, trade, and energy prices. It also has had a significant effect on foreign investment in the energy sector of these countries.

This paper employs several statistical techniques to examine the trends in energy consumption, production, and investment in selected countries that have experienced economic transitions, in order to extrapolate relevant implications for Cuba. This study projects Cuba's energy demand through 2020 based upon three GDP growth scenarios.

During transition Cuba is likely to experience high energy consumption growth rate. As Cuba moves toward a market economy energy demand is expected to increase exponentially. This unprecedented demand will create numerous investment opportunities for the Cuban government, Cuban enterprises, and foreign investors. This demand and subsequent investment would enable Cuba to develop many of its domestic energy resources, including oil deposits in its Gulf of Mexico tracts.

(Presented at the 15th Annual Meeting of the Association for the Study of the Cuban Economy, Miami, August 2005l)