Pricing Reform and Enhanced Investment in the Energy Sector: A Way towards East Asian Economic Development

The combination of energy pricing reform and energy sector investment liberalisation is thus expected to enhance economic development in the region and also to encourage people to use more efficient and cleaner fuels. This study indicates that even if the partial removal of energy subsidies has occurred, further removal can yield further benefits of market efficiency. Energy sector investment liberalisation is another important issue of energy market integration that has been associated with methodological difficulty in quantitative economic analysis. This study developed a new multi-regional computable general equilibrium (CGE) model for conducting a quantitative assessment of electricity sector investment scenario in which the investment demands in the EAS member countries projected by the International Energy Agency are met. The most interesting finding shows that introduction of FDI increases not only the national GDP of the investing countries but also the regional GDP as the whole EAS region by 0.04%.