The Relationship between Major Oil Products Consumption and Efficiency of Industry Sector in Selected Oil Exporting and Importing Countries
Keywords:Efficiency; Industry Sector; Oil Products Consumption; DEA Window Analysis; Low of Diminishing Returns; Generalized Method of Moments (GMM)
The aim of this study is to investigate the realization of the law of diminishing returns in usage of major oil products in the industry sector of some oil exporting and importing countries during 2002- 2008. To achieve this aim, in a first stage the efficiency of industry sector of countries has been calculated using DEA window analysis and then in the second stag the existence of an inverted U' shape relationship between major oil product consumption and efficiency has been tested in the context of dynamic panel data (GMM) approach. The results confirm this relationship in each group of countries except that the turning point in the case of oil importing countries is much higher than oil exporting countries. This firstly suggests that oil dependence in oil importing countries is more than oil exporting countries and secondly indicates that the industry sector of oil importing countries have advanced technology and high scale and capacity so that they can take benefits of oil products consumption without decrease in efficiency.