In a free public seminar at 3:30 PM on March 6, in room 1115 of the Wisconsin Energy Institute, UW–Madison professor of agricultural and applied economics and WEI interim director Ian Coxhead will give a talk on energy and international development.
Many developing countries control or subsidize domestic fossil fuel prices. Subsidies are thought to promote economic growth by lowering the cost of a key production input, and to favor the poor by controlling or reducing the prices of fuels used for cooking, lighting and transport. However, subsidies also incur a range of social and economic costs — in addition to their environmental consequences — and gaining an appreciation for these requires a broader analytical perspective than can be acquired by looking at fuel pump prices alone. Political economy is an additional challenge for governments seeking to find and fix an optimal subsidy rate, as Mexico’s January 2017 Gasolinazo protests make clear. In this talk I explore analytical, empirical and policy issues with examples from the current experience of three large emerging economies: Indonesia, China and Mexico.