A Review of the Dynamics between the Energy Sector and the Economy of Trinidad and Tobago

Abstract:     
Trinidad and Tobago is a small, energy-based, developing economy of the Caribbean. Using the most recent available data (2007) the energy sector in this country accounts for approximately 87 percent of exports, 48 percent of government revenue and 43 percent of gross domestic product. Historically, the sector has also been the largest recipient of foreign direct investment. Because of the importance of the energy sector to Trinidad and Tobago, an understanding of the dynamics between energy inputs and the economy can be very useful in guiding government planning and policy decision making. This paper uses correlation analysis to investigate the nature of the relationship between key energy sector parameters and macroeconomic variables. The strong degree of correlation among all the variables examined underscores the need for developing an econometric model which links the macroeconomy to the energy sector.

Number of Pages in PDF File: 5

Keywords: Macroeconomic Impact of Oil and Gas, Hydrocarbon Production, Energy Sector, Trinidad and Tobago

JEL Classification: L71, O54, Q43, B23, C10, F14, O11

Accepted Paper Series