NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR
RELATIONSHIP BETWEEN T M B E R CONSUMPTION AND ECONOMIC GROWTH IN THE OECD COUNTRIES WITH RESPECT TO THE EFFECT OF THE OIL
PRICE EXPLOSIONS
Tibor Bencze
June 1985 CP-85-32
National Planning Office H-1370 Budapest, Hungary
C o l l a b o r a t i v e P a p e r s r e p o r t work which h a s not been performed solely at t h e International Institute f o r Applied Systems Analysis and which h a s r e c e i v e d only limited review. Views o r opinions e x p r e s s e d h e r e i n d o not necessarily r e p r e s e n t t h o s e of t h e Insti- t u t e , i t s National Member Organizations, o r o t h e r organizations supporting t h e work.
INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS 2361 Laxenburg, Austria
CONTENTS
Introduction
Development of timber consumption as a function of economic growth
The influence of oil p r i c e explosions on t h e development of economic growth and s p e c i f i c timber consumption The relationship between timber consumption and economic development
R e f e r e n c e s
Appendix: Diagrams
RELATIONSHIP BETl'YEEN TIMBER CONSUMPTION AND ECONOMIC GROWTH I N THE OECD COUNTRIES WITH mSPECT TO THE EFFECT OF THE OIL
PRICE EXPLOSIONS
The r e l a t i o n s between t h e consumption volume of t i m b e r manu- f a c t u r i n g products and economic growth has a l r e a d y been
s t a t e d by s e v e r a l i n v e s t i g a t i o n s . There a r e a l s o s u c h a n a l y s e s which i n d i c a t e d a verg c l o s e r e l a t i o n s h i p between t h e l e v e l of economic development and p e r c a p i t a consumption. It s h o u l d a l s o be mentioned t h a t t h e r e c o g n i t i o n of t h e s e r e l a t i o n s h i p s played a n i m p o r t a n t r o l e i n t h e f o r m a t i o n of t i m b e r consump- t i o n f o r e c a s t s e l a b o r a t e d by FAO. 1/
In my s t u d y I i n t e n d t o p u b l i s h t h o s e r e s u l t s and e x p e r i e n c e s which I managed t o o b t a i n i n t h e c o u r s e of a n a l y s i n g t h e f a c t s and figures i n r e l a t i o n t o t h e OECD c o u n t r i e s between 1960-1982.
I c a r r i e d o u t my i n v e s t i g a t i o n s i n t h r e e major groups of t i m b e r manufacturing products. The product groups wsawnwood and s l e e p e r s I*, "wood-based panels and "paper and paperboardn p r a c t i c a l l y r e p r e s e n t t h e whole s c a l e of manufactured products.
A t t h e judgement o f t h e economic development l e v e l and economic growth, r e t s p e c t i v e l y , I u s e d t h e p e r c a p i t a GDP v a l u e s i n
c o n s t a n t 1975 y e a r US $ p r i c e s f o r c e r t a i n c o u n t r i e s . In c a s e of t h e t h r e e product groups t h e a n a l y s e s comprise e v e r y y e a r of t h e p e r i o d and e v e r y OECD country. In t h e course o f i n v e s t i - g a t i o n s I a p p l i e d on one hand graphic a n a l i t i c a l methods and on t h e o t h e r hand c o r r e l a t i o n - m m s s i o n - a n a l i t i c a l methods as well.
1/ EUROPEAN TIMBER TRENDS AND PROSPECTS From 1950 t o 2000
Food and A g r i c u l t u r e O r g a n i z a t i o n Geneve 1976
During m y work I primarily investigated the following major issues :
What kind of a relationship c a n be observed between economic growth and the development o f the consumption o f timber manufacturing product groups i n certain
countries?
Are the relationships suitable to be used for making forecasts by taking into consideration the constantness and int ensivit y o f the trend?
T o what an extent did oil price explosions 1/
influence the relationship between economic growth and timber consumption 2/1
Did their effect result in steady o r temporary changes?
How did the relationship develop between economic develop- ment level3/ and timber consumption i n case o f investigated countries? To what an extent did the character and the
intensity of the relationship change during the more than two decades?
1/ Under oil price explosions the sl.udden change af the oil prices i n 1973 and 1979 i s to be understood.
2/ Hereinafter under !Timber consumptionn the consumption of the three manufacturing product groups
-
defined i n the introduction-
i s t o be understood.3/ b the investigation the economic development level i s characterized by the level of the per capita GDP value i n 1975 constant U S prices i n certain countries.
- 3 -
Development of timber consumption as a f u n c t i o n of economic growth
The worked up d a t a of c e r t a i n c o u n t r i e s a r e t o be found i n t h e enclosed diagrams No. 1-16. To i l l u s t r a t e t h e developed t r e n d s more c l e a r l y
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i n case of every country-
I used onef i g u r e f o r t h e t h r e e product groups. The s p e c i f i c consumption d a t a of t h e product groups a r e p l o t t e d i n t h e diagrams a g a i n s t t h e p e r c a p i t a GDP value i n t h e given year.
Under s p e c i f i c consumption i n ma /lo00 c a p i t a i s t o be understood i n t h e case of l*sawnwood and s l e e p e r s and "wood-based p a n e l s m while i n t h e case of "paper and papemoodw kg/per c a p i t a value i s t o be understood. The per c a p i t a / G ~ ~ l e v e l i s r e p r e s e n t e d by t h e 1975 v a l u e s i n c o n s t a n t US j!!.
I connected t h e r e p r e s e n t e d p o i n t s i n t h e diagram according t o t h e consecutive years. So I got a continuous l i n e
-
which g i v e s a.n extremely c l e a r review of t h e connec- t i o n between economic growth and timber consumption;-
where t h e degree of t h e i n t e n s i t y of t h e r e l a t i o n - s h i p become6 immediately a p p a r e n t ;-
which r e p r e s e n t s t h e development of s p e c i f i c timber consumption as a process-
comprising a period of twenty two y e a r s ;-
which shows how t h e change of c o n d i t i o n s s t r o n g l y i n f l u e n c i n g economic growth-
eg. t h e o i l p r i c e explosions in 1973 and 1979-
e f f e c t e d on one hand economic growth i t s e l f and on t h e o t h e r hand t h edevelopment of t h e r e l a t i o n s h i p between economic n o w t h and timber consumption;
-
which e n a b l e s u s t o judge whether-
a f t e r such a s t r o n g shock a f f e c t i n g a l l c o u n t r i e s-
any change c a n be expected and what kind o f a change can be expected i n t h e development o f t h e t r e n d of t h e r e l a t i o n s h i p s ;-
and w h i l e t h e r e r e a l l y e x i s t s a r e l a t i o n s h i p between the development o f t i m b e r consumption and t h e develop- ment of economic growth and w h i l e i t i s e s p e c i a l l y c l o s e in c a s e of product groups %ood-based p a n e l s and "paper and paperboardN' t h e development of t h e consumption t r e n d i n time c a n c o n s i d e r a b l y w e l l followed i n t h e diagram-On t h e b a s i s of t h e a n a l y s i s o f t h e diagram and t h e numerical i n v e s t i g a t i o n s o f t h e r e l a t i o n s h i p t h e f o l l o w i n g c o n c l u s i o n s c a n be drawn:
-
U n t i l t h e f i r s t o i l p r i c e e x p l o s i o n-
a p a r t from t h e development o f nsawnwood and s l e e p e r s w consump- t i o n i n A u s t r a l i a and New Zealand-
a p o s i t i v e r e l a - t i o n s h i p c a n be observed between t i m b e r consumption and economic growth i n t h e c a s e of t h e t h r e e product groups i n a l l c o u n t r i e s ;-
the r e l a t i o n s h i p i s c o n s i d e r a b l y c l o s e r i n c a s e o f ' b o r e up-to-date t i m b e r manufacturing p r o d u c t s-
p a n e l s , paper and paperboard-
t h a n i n c a s e of o f t h e " t r a d i t i o n a l n sawnwood and s l e e p e r s-
p r o d u c t group.The
relations hi^
c a n almost be c o n s i d e r e d as n f u n c t i o n l i k e ? between economic growth and t h e consumption o f %ore up-to-daten a s s o r t m e n t s e s p e c i a l l y u n t i l t h e f i r s t o i l p r i c e e x p l o s i o n5
s e v e r a l c o u n t r i e e . P r i m a r i l y , A u s t r i a , France, I r e l a n d , I t a l y and Spain b e l o n g t o t h i s group of c o u n t r i e s .
The r e l a t i o n s h i p between t h e product group "sawnwood and s l e e p e r s w and economic growth can c l e a r l y be observed i n t h e i n v e s t i g a t i o n period. This can be s t a t e d d e s p i t e t h e f a c t t h a t a f t e r t h e second o i l p r i c e explosion /1979/ a new
phenomenon can be observed i n s e v e r a l c o u n t r i e s /~a.nada, t h e United S t a t e s , Sweden and Japan belong t o here/, i n p a r t i c u l a r
a v e r y d e f i n i t e d e c h n e of s p e c i f i c sawnwood consumption. The i n t e n s i t y of t h e r e l a t i o n s h i p i s c o n s i d e r a b l y weaker t h a a e i t h e r i n case of wood-based panel o r i n case of paper and pa- p e r b o a r d ~ . This statement i s t r u e of t h e North European c o u n t r i e s i n an increased e x t e n t
-
where g r e a t wood r e s o u r c e s a r e a v a i l a b l e t h e major p a r t of which t h e y export-
/ m a i n l y Finland andwede en/, It is, however, t r u e in t h e c a s e of A u s t r i a , Norway and Denmark as well.
The proper e x p l a n a t i o n of t h e s e phenomena r e q u i r e s f u r t h e r i n v e s t i g a t i o n , It can, however, be supposed that t h e i n t e n s i t y of t h e r e l a t i o n s h i p would improve i f t h e c a l c u l a t i o n could be c a r r i e d out on t h e b a s i s of e f f e c t i v e / r e a l a c t u a l consumption d a t a i n s t e a d of t h e apparent consumption values /production
+
import-
export = consumption/. The changes i n s t o c k a r e
g e n e r a l l y g r e a t e r i n this product group t h a n i n case of panels o r paper and paperboards,
It i s remarkable that while s p e c i f i c sawnwood product consump- t i o n r a p i d l y i n c r e a s e s
-
a p a r t from t h e period a f t e r t h esecond o i l p r i c e e x p l o s i o n
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i n Canada, i t h a r d l y i n c r e a s e si n t h e United S t a t e s o r i t even s t a g n a t e s d u r i n g t h e same period.
Apart from a s h o r t period
-
between 1960 and 1973-
s p e c i f i c sawnwood and s l e e p e r s consumption d i d n o t change i n GreatB r i t a i n e i t h e r . The p e r c a p i t a values of t h e wood-based panels and paper and paperboard consumption c o n s i s t e n t l y increaszd.
In t h e c a s e of Australia and New Zealand
-
i n an a b s o l u t e l y d i v e r s e way-
n e g a t i v e c o r r e l a t i o n c a n be observed between economic growth and t h e s p e c i f i c consumption- o f nsawnwood and s l e e p e r s f f .The development of t h e t r e n d i s ~ e s u m a b l y t h e consequence o f t h e f a c t that t h e removal volume of b a s i c m a t e r i a l s n e c e s s a r y t o t h e p r o d u c t i o n o f nsawnwood and s l e e p e r s products reduced and t h e i r procurement from o t h e r c o n t i n e n t s
-
due t op r i c e r e a s o n s e t c ,
-
was n o t p o s s i b l e o r i t would n o t have been e x p e d i e n t , By a l l means, this condi- t i o n could provide a good p o s s i b i l i t y f o r u s t o a n a l y s e t h e r e l a t i o n s h i p between t h e consumption of sawnwood product and t h e consumption o f " s u b s t i - t u t i n g n products. The i n c r e a s e o f t h e consumption volume o f wood-based p a n e l s , paper and paperboards could n o t s u b s t i t u t e t h e f a l l i n g o u t q u a n t i t y of sawnwood.On t h e b a s i s o f t h e g r a p h i c a n a l y s i s t h e c o n c l u s i o n can c l e a r l x be drawn that b e s i d e s t h e permanent economic growth of a l o n g e r p e r i o d and t h e n c o n s i s t e n t and n o t sudden changew of c o n d i t i o n s
c o n s i d e r a b l y i n f l u e n c i n g economic development a v e r y d e f i n i t e r e l a t i o n s h i p has developed between t i m b e r u t i l i z a t i o n and eco- nomic growth. The c l o s e n e s s of t h i s r e l a t i o n s h i p a c h i e v e s such an e x t e n t i n c a s e of wood-baaed p a n e l s , paper and paperboards t h a t i t would provide a p o s s i b i l i t y o f f o r e c a e t i n g consumption i n most of t h e c o u n t r i e s u n d e r i n v e s t i g a t i o n . I c o n t r o l l e d t h e i n t e n s i t y of t h e r e l a t i o n s h i p by c o r r e l a t i o n c a l c u l a t i o n as w e l l . The r e l a t i o n s h i p could be b e s t c h a r a c t e r i z e d by l i n e a r r e g r e s s i o n Functions c a l c u l a t e d on t h e b a s i a of time s e r i e s .
Only t h e development of t h e consumption of wood- based p a n e l s i n Denmark showed aa a b s o l u t e l y d i v e r s e t r e n d .
The development of t h e s p e c i f i c consumption v a l u e s o f t h e i n v e s t i g a t e d r a p i d l y d e v e a i n g c o u n t r i e s / ~ a p a n , Greece o r spain/ d i d n o t show a c o n s i d e r a b l e d i f f e r e n c e f r o m t h e g e n e r a l t e n d e n c i e s . In c a s e o f J a p a n t h e l i n e a r r e l a t i o n s h i p is v e r y d e f i n i t e between 1960 and 1973. A s f o r S p a i n
-
a f t e r t h er i s i n g t r e n d s t a r t e d i n 1962
-
t h e l i n e a r r e l a t i o n s h i p is c l e a r ss w e l l . In t h e c a s e of t h i s c o u n t r y a d o s e l i n e a r r e l a t i o n - s h i p hss developed i n t h e sawnwood product group as w e l l .Greece can be c h a r a c t e r i z e d by t h e l i n e a r r e l a t i o n s h i p as well.
However, s h o u l d t h e development o f economic growth be broken
-
ss a result of t h e c o n s i d e r a b l e change o f c o n d i t i o n s -/eg. o i l p r i c e e x p l o s i o n s in 1973 o r i n 1979/, t h e r e l a t i o n - s h i p between t i m b e r consumption and economic growth undergoes b a s i c changes, The d e v e l o p e n t o f consumption
-
i n c a s e of t h e t h r e e product groups-
a r e u n d e r such c o n d i t i o n s e x t r e m e l y s t r o n g l y i n f l u e n c e d b y o t h e r f a c t o r s as w e l l , However, t h i s forms t h e m a t t e r of t h e second c h a p t e r o f my s t u d y .However, b e f o r e d e a l i n g w i t h t h a t problem I s h o u l d l i k e t o
o u t l i n e t h o s e major c o n c l u s i o n s which c a n be determined i n r e l a - t i o n t o t h e p l a c e of t h e t h r e e product groups i n t h e s t r u c t u r e of consumption on t h e b a s i s of t h e diagram:
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On t h e b a a i s of t h e a n a l y s i s of t h e diagram-
i t i sc l e a r t h a t in t h e t i m b e r e x p o r t i n g c o u n t r i e s
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andi t i s as t r u e of Norway, Sweden and F i n l a n d as of A u s t r i a o r C a n a d a and a l s o of t h e t i m b e r consumption i n New Zealand
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sawnwood products t a k e a c o n s i d e r a b l eThese
, g r e a t e r g l a c e i n consumption s t m c t u r e t h a n a l s o i n o t h e r c o u n t r i e s u n d e r i n v e s t i g a t i o n . But a l s o
t h e s p e c i f i c consumption o f pbp-to-date t i m b e r p r o d u c t s n is v e r y high i n t h e s e c o u n t r i e s .
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It c a n a l s o be s t a t e d that "paper and paperboardsn r e p r e s e n t a c o n s i d e r a b l y g r e a t e r p r o p o r t i o n in t i m b e r consumption in Great B r i t a i n in comparison t o t h e consumption s t r u c t u r e of most c o u n t r i e s .-
It c a n be s e e n f r o m t h e diagram that i n t h e majorp a r t of t h e South European and West European c o u n t r i e s
-
in comparison t o t h e t i m b e r e x p o r t i n g c o u n t r i e s-
"up-to-date t i m b e r products r e p r e s e n t g r e a t e r weight, l i k e npaper and paper boards" and nwood-based p a n e l s
:'
The consumption d a t a of I t a l y , Holland, t h e Netherlands, Iiuxemburg and t h e F e d e r a l Republic o f Germany j u s t i f y this f a c t .
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F i n a l l y , this g r a p h i c method a l s o c l e a r l y proves t h a t t h e p r o p o r t i o n of *Wood-based p a n e l s rtand **paper and paperboardsVtgrew-
d u r i n g t h e p e r i o d u n d e r i n v e s t i g a - t i o n-
in t h e consumption s t r u c t u r e .s t a t e m e n t s a l r e a d y f o r e c a s t that t h e r e l a t i o n s h i p between economic development l e v e l and s p e c i f i c t i m b e r consumption
is i n f l u e n c e d b e s i d e s development l e v e l by o t h e r f a c t o r s as w e l l .
1/ It should be t a k e n i n t o c o n s i d e r a t i o n that t h e p o s i t i o n in t h e diagram i s o n l y r e l a t i v e w h i l e I used s p e c i f i c consump- t i o n v a l u e s f o r all t h r e e product groups i n t h e i r n a t u r a l u n i t of measure, t h u s p a p e r and paperboard products are
c h a r a c t e r i z e d b y kg/per c a p i t a while t h e two o t h e r product groups a r e c h a r a c t e r i z e d by d/per 1000 c a p i t a .
The i n f l u e n c e of o i l p r i c e e x p l o s i o n s on t h e development of economic growth and s p e c i f i c t i m b e r consumption
The g r a m c method c l e a r l y and u n a n i m o a y r e f l e c t s how t h e change of economic growth i n f l u e n c e s t h e developnent of s p e c i f i c t i m b e r consumption. Generally, t h e e f f e c t of small changes c a n be w e l l followed i n t h e diagram, N a t u r a l l y , t h e change o f economic growth and economic development l e v e l i n c e r t a i n c o u n t r i e s c a n be s e e n from t h e diagram as well.
The o i l p r i c e e x p l o s i o n s had a c o n s i d e r a b l y s t r o w e f f e c t on t h e development of t h e OECD c o u n t r i e s . T h i s e f f e c t
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i f n o tt o t h e same e x t e n t
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w a s unconvenient f o r all c o u n t r i e s u n d e r i n v e s t i g a t i o n , G e n e r a l l y as a r e s u l t of i t t h e r a t e of economic development reduced t o a g r e a t e x t e n t and in t h e c a s e of most c o u n t r i e s t h e achieved developnent l e v e l d e c l i n e d .T h i s change had a s t r o n g e f f e c t b o t h on t h e development of s p e c i f i c t i m b e r consumption and on t h e r e l a t i o n s h i p between t i m b e r consumption and economic growth. It i s ' c h a r a c t e r i s t i c t h a t t h e r e d u c t i o n of s p e c i f i c consumption, achieved a f a r f i r e a t e r e x t e n t that would have been j u s t i f i e d b y t h e
-
e s t a b -l i s h e d
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r e l a t i o n s h i p be tween economic growth and t i m b e r consump- t i o n .-
Thus, t h e development o f t i m b e r consumption was i n f l u e n c e d
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be-s i d e s economic growth
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by o t h e r f a c t o r s t o a f a r g r e a t e r e x t e n t . The change of r e l a t i o n s h i p showed s i m i l a r secondary s i g n s d u r i n ~ t h e p e r i o d of b o t h o i l p r i c e e x p l o s i o n s . It c a n a l s o be s t a t e d t h a t t h e d e e p e s t p o i n t of t h e n e g a t i v e e f f e c t could be observed i n t h e y e a r-
g e n e r a l l y t h e second y e a r-
a f t e r t h e sudden p r i c e change, namely i n 1975 a f t e r t h e o i l p r i c e e x p l o s i o n i n 1973 and i n 1 9 8 1 a f t e r t h e second o i l p r i c e e x p l o s i o n i n 1979.The i n t e n s i t y of t h e negative e f f e c t
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s i m i l a r l y t o t h e e x t e n t of o i l p r i c e change-
w a s weaker i n 1981 t h a n i n 1975.Concerning t h e period between 1973 and 1975 i t i s noteworthy by a l l means t h a t i n t h e s p e c i f i c t i m b e r consumption of Norway
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s i m i l a r l y t o o t h e r c o u n t r i e s-
a c o n s i d e r a b l e d e c l i n e could be observed i n comparison t o t h e economic development l e v e l but i t was t h e o n l y c o u n t r y where economic growth d i d not slow down but even a c c e l e r a t e d , T h i s c o n d i t i o n a l s o j u s t i f i e s t h a t d u r i n g this period n o t t h e development of economic growth but o t h e r f a c t o r s played t h e main r o l e i n t h e r e d u c t i o n of s p e c i f i c t i m b e r consumption,Generally, t h e d e c l i n e concerned t h e consumption of sawnwood p r o d u c t s t o t h e g r e a t e s t e x t e n t but t h e s p e c i f i c consumption
of twood-based panelsl,, "paper and paperboardsndecreased s t r o n g l y as well,
Thus, under t h e i n f l u e n c e of t h e o i l p r i c e explosions t h e r e l a t i o n s h i p which became e s t a b l i s h e t t between timber consump- t i o n and economic growth under t h e r e l a t i v e l y c o n s i s t e n t eco- nomic development of previous periods broke o f f . The q u e s t i o n a r i s e s i n any case: What happens o r what can happen a f t e r t h e recovery of economic growth? Does t h e fonner r e l a t i o n s h i p develop a g a i n o r t h e formation of a n o t h e r d i f f e r e n t r e l a t i o n - s h i p can be expected?
The following q u e s t i o n should be answered as well:
Which f a c t o r s can p r i m a r i l y l e a d t o such a g r e a t change i n
t h e r e l a t i o n s h i p between timber consumption and economic growth under such an i n t e n s i v e change of c o n d i t i o n s ?
The i n v e s t i g a t i o n of t h e period between t h e two o i l p r i c e explosions and t h a t of t h e period following t h e second o i l p r i c e explosion e n a b l e u s t o g i v e c e r t a i n answers.
Primarily, i t can be s t a t e d t h a t as f a r as t h e t r e n d i t s e l f i s concerned generally, the reformation of t h e l i n e a r r e l a t i o n - s h i p can be rendered probable which w a s otherwise c h a r a c t e r i s t i c of the period before o i l p r i c e explosions,
It i s a l s o probable t h a t t h i s new r e l a t i o n s h i p occurs at a lower l e v e l of s p e c i f i c timber consumption projected t o t h e u n i t of the GDP, It seems t o be possible e s p e c i a l l y i n case of the timber exporting c o u n t r i e s , This conclusion can be drawn from t h e development of the consumption t r e n d s i n France, Belgien, Luxemburg, t h e Federal Republic of Germany, Japan and Great B r i t a i n , But the development of a similar trend becomes out- l i n e d i n Austria and i n Finland among t h e timber exporting where the development does not make impossible t h e recovery of the r e l a t i o n s h i p - l e v e l of previous periods, In t h i s respect Switzerland, I t a l y , Deemark and ' A u s t r a l i a should be mentioned f i r s t of all,
Otherwise I note t h a t the trend according t o
which r e l a t i o n s h i p s d e v e l o p . a t a lower l e v e l seems t o be j u s t i f i e d by the i n v e s t i g a t i o n concerning the timely developmeqt of economic development l e v e l and s p e c i f i c timber consumption which w i l l be d e a l t with i n d e t a i l s l a t e r on,
Besides. general tendencies i t shauld be mentioned t h a t
countries with e s p e c i a l l y high s p e c i f i c consumption a f t e r the second o i l price explosion a considerable g r e a t decrease of s p e c i f i c consumption took place. The decrease i s e s p e c i s l l y apparent i n the case of sawnwood and s l e e p e r s product group, It achieves such a g r e a t e x t e n t primarily i n the case of
Canada and the United S t a t e s t h a t i t makes the s t e a d i l y lower l e v e l of s p e c i f i c eonsumption probable,
However, taking i n t o consideration the f a c t t h a t similar phenomena can occur i n some o t h e r timber exporting countries generally with large wood stocks so i t can be judged t h a t t h e extremities of s p e c i f i c consumption indexes can moderate, It is probable i n the sawnwood and s l e e p e r s product group t h a t the e s p e c i a l l y high s p e c i f i c values of the timber exporting countries come narrower t o the lower indexes generally, of t h e timber importing countries,
For sake of the f u t u r e u t i l i z a t i o n of t h e i n v e s t i g a t i o n r e s u l t s , t h e b e t t e r judgement of expected tendencies i t i s extremely important t o become f a m i l i a r with those r e s u l t s which are p r i m a r i l y t o be blamed f o r the considerable change
-
outlinedabove
-
of t h e tendencies,Answering this question is not an easy t a s k because
-
and i ti s c l e a r l y j u s t i f i e d by the i n v e s t i g a t i o n s
-
i t is about the summarizing e f f e c t of s e v e r a l f a c t o r s ,O u t of the f a c t o r s , primarily the extremely s t r o n g increase, and the considerable decline of fixed a s s e t s consumption
/construction a c t i v i t y /
-
s t r o n g l y exceeding the r a t e of modera- t i o n of economic growth-
should be mentioned,A s f o r timber prices i t can be observed t h a t s o a f t e r t h e o i l price explosion in 1973 as i n 1979 they suddenly rose, The highest timber price l e v e l
-
i n the e v e n period-
w a s achieved in the first o r i n t h e second year a f t e r the o i l price explosion, A d r a s t i c decline of timber consumption can a l s o be observed during t h i s period, Thus, i t is t h e sudden change of p r i c e s which is e s s e n t i a l l y nresponsiblew f o r t h e change of consumption tendencies- during a period when conditions underwent such g r e a t chanms,A t t h e same time i t should a l s o be s t a t e d t h a t
-
a f t e r one o r two years a f t e r the shock-
ther e l a t i o n s h i p between economic growth and timber consumption became restored besides t h e consi- derably higher timber price l e v e l . T h i s r e l a t i o n - s h i p was, however, not influenced e i t h e r by smaller o r permanent price changes. Concerning a longer term, t h e development o f timber consumption is actuEjLly determined by economic growth!
I think, however, t h a t answering these questions require Further i n v e s t i g a t i o n s , Taking i n t o consideration the out- l i n e d f a c t o r s brings n e a r e r up t o a b e t t e r howledge of the r e l a t i o n s h i p s between economic growth and timber consumption and o t h e r f a c t o r s , respectively.
The r e l a t i o n s h i p between timber consumption and economic develoment
The r e s u l t s of former chapters indicated t h a t between the
development of t h e s p e c i f i c consumption indexes of the i n v e s t i - gated product groups and of economio growth in t h e OECD countries t h e r e e x i s t s a very close
-
although d i f f e r e n t by product groups-
c o r r e l a t i o n r e l a t i o n s h i p ,
The diagrams c l e a r l y show t h a t the type of r e l a t i o n s h i p s can be considered as n e a r l y i d e n t i c a l in a l l countries and they make probable an a c t u a l r e l a t i o n s h i p between t h e s p e c i f i c indexes of economic development l e v e l and timber consumption.
Othexwise it w a s a l r e a d y s t a t e d by s e v e m l o t h e r i n v e s t i g a t i o n s .
1/
1/ eg, Ferenc ~ h o s s ~ : The measurability and a new measuring method of economic development l e v e l Budapest, 1963
EUROPEAN TIMBER TBENDS BND PROSPECTS 1950-2 000
Food and A&cultural Organization
In t h e course of i n v e s t i g a t i o n s "the economic development l e v e l w a s characterized by t h e l e v e l of per c a p i t a GDP i n c o n s t a n t 1975 y e a r US 9( p r i c e .
The diagrammatic procession of d a t a
-
diagrams No, 17-18-19-
has a l s o i n d i c a t e d t h a t t h e r e e x i s t s t h e r e l a t i o n s h i p
-
between 1960-1982-
during t h e i n v e s t i g a t e d period as well.However, i t can a l s o be s t a t e d t h a t t h e r e l a t i o n s h i p can not be described by t h e same r e g r e s s i o n f'unction n e i t h e r i n case of wsawnwood and s l e e p e r s w n o r i n case of npaper and paper- boardw, In case of both product groups two d i f f e r e n t groups of c o u n t r i e s a r e -rated.
However, such a d e f i n i t e l y d i v e r s e t r e n d can not be determined i n "wood-based panelsw. The d a t a of a l l c o u n t r i e s i n d i c a t e d a r e l a t i o n s h i p of i d e n t i c a l c h a r a c t e r ,
In o r d e r t o get an answer t o t h e development of t h e types of r e l a t i o n s h i p s and t h e i n t e n s i t y of r e l a t i o n s h i p s i n time I used t h e cross-cut d a t a of f o u r d i f f e r e n t years i n case of all t h r e e assortment groups.
Using t h e time s e r i e s of t h e l a t e s t OECD s t a t i s t i c s concerning t h e years between 1964-1982 I c a r r i e d out t h e r e g r e s s i o n
analyses f o r t h e years 1964, 1973, 1979 and 1982,
In s e l e c t i n g t h e years I w a s guided by two p o i n t s of view. On one hand I wanted t o know t h e r e l a t i o n s h i p s between t h e first and t h e last y e a r of t h e i n v e s t i g a t e d period, on t h e o t h e r hand t h e r e l a t i o n s h i p between those years which
-
as being t h e years of o i l p r i c eexplosions
-
p r a c t i c a l l y mean t h e end of t h e d e v e l o p e n t period as weU.The y e a r 1973 w a s otherwise t h e medium y e a r of t h e period.
In case of t h e "s a w n w o o d a . n d s 1 e e p e r s w /diagram No. l8. it can c l e a r l y be s t a t e d t h a t t h e r e l a t i o n - s h i p between s p e c i f i c consumption of timber importing and timber e x p o r t i n g c o u n t r i e s and economic developnent l e v e l i s d i f f e r e n t . P r i m a r i l y , t h e North European c o u n t r i e s where g r e a t timber s t o c k s are a v a i l a b l e /pinland, Norway,
wede en/
t h eNorth American c o u n t r i e s r i c h i n timber/ Canada, t h e United s t a t e s / and furthermore Austria, P o r t u g a l , and New Zealand which a l s o e q o r t t i m b e r belong t o t h e "timber e x p o r t i n g
c o u n t r i e s
Taking i n t o c o n s i d e r a t i o n t h e place of s p e c i f i c consumption d a t a i n t h e diagram, however, even Denmnnrk and Japan can be c l a s s i f i e d i n t o t h i s group. It i s c h a r a c t e r i s t i c of t h i s group t h a t t h e s p e c i f i c consumption of t h e c o u n t r i e s belonging t o h e r e exceeds t h e s p e c i f i c consumption v a l u e s of c o u n t r i e s with similar d e v e l o p e n t l e v e l .
Although I c a l l e d t h i s group "timber e x p o r t i n g groupw but n a t u r a l l y no expe.rt l e a v e s i t out of c o n s i d e r a t i o n t h a t i n this group a l s o timber importing c o u n t r i e s a r e t o be found. Denmark, Japan and t h e United S t a t e s belong t o t h i s cathegory. It shows t h a t
-
although a h i g h e r consumption l e v e l of nsawnwood and s l e e p e r s i s g e n e r a l l y c h a r a c t e r i s t i c of timber e x p o r t i n gc o u n t r i e s
-
i t s development i s , however, i n f l u e n c e d b e s i d e s a v a i l a b l e timber s t o c k s and economic develop- ment l e v e l by o t h e r f a c t o r s as well. For i n s t a n c e t h e consumer h a b i t s of t h e region where t h ecountry i s s i t u a t e d .
A further characteristic of the countries belonging to this cathegory is that the relationship between economic develop- ment level and specific consumption is considerably looser
-
the correlation coefficient shows only0.77
value which is calculated on the basis of 1979 data-
than in case of the "timber importing group1*. This also indicates that in this group the redundance of timber material and regional effect is a strong influencing factor.I investigated the adjustment of various regression functions in relation to the
13
"timber importing" countries in four yeara. Concerning the years 1964, 1973 and 1982 thelgy = a
+
b.lg x-
type of function proved to adjust in the best way.Concerning the relationship of
1979
the correlation was the closest h case of the application of they = a
+
box-
type of functionwhere y = per 1000 capita consumption of sawnwood and sleepers
x = per capita GDP value in constant 1975 US $
The parameters of the regression f'unctions and the correla- tion coefficients developed in the yeara under investigation as follows:
Year a b r
r = correlation coefficient
The c a l c u l a t i o n s show t h a t the r e l a t i o n s h i p between sawnwood
-
consumption and economic development l e v e l-
e s p e c i a l l y a f t e r the second o i l price explosion-
i s considerably more uncertain than it used t o be, It can a l s o be observed t h a t t h e i n t e n s i t y of the r e l a t i o n s h i p gradually decreased i n t h e period under i n v e s t i g a t i o n ,The diagram shows t h a t the s p e c i f i c consumption of wsawnwood and s l e e p e r s w decrease in comparison t o GDPo It a l s o demonstrates t h a t t h e type of regression curves changes, The regression
cume o f 1979 i s l i n e a r i n comparison t o the t h r e e o t h e r years, In the diagrams
-
and t h e same i s t r u e ofthe graphical i l l u s t r a t i o n of wood-based panels and paper and paperboards
-
fourcalculated regression curves and data s e r i e s of 1973 are i l l u s t r a t e d , The countries are marked by the usual abbreviations used on t r a n s p o r t equipnent,
Such a diverse tendency
-
as in case of sawnwood products-
can not be observed i n case of nW o o d
-
b a s e d p a n e 1 sn.A t the same time i t a l s o i n d i c a t e s t h a t the development of s p e c i f i c consumption depends t o a l e s s extent o r does not depend at a l l f r o m t h e timber production f a c i l i t i e s ,
In every year under i n v e s t i g a t i o n the
l g y = a
+
b.
l g x type of function proved t o a d j u s t i n t h e best way.The parameters of the function and the c o r r e l a t i o n c o e f f i c i e n t s developed as follows in t h e given years:
Year a b r
In comparison t o t h e previous product group some d i f f e r e n c i e s can immediately be observed concerning diagram 18 and t h e f i g u r e s
.
While i n c a s e of nsawnwood and s l e e p e r s " t h e s p e c i f i c consump- t i o n v a l u e s belonging t o t h e same development l e v e l decreased ptradually and permanently i t d i d n o t occur i n c a s e of "wood-
bassed panels
".
The 1973 r e g r e s s i o n curve shows c l e a r l y an i n c r e a s e of s p e c i f i c consumption. According t o t h e r e l a - t i o n s h i p in 1979 a unit of GDP v a l u e h h a t i s development l e v e l / i m p l i e s higher s p e c i f i c consumption t h a n i n 1964. T h i s d i v e r s e t r e n d a l s o i n d i c a t e s a s u b s t i t u t i o n a l r e l a t i o n s h i p between t h e product groups o f nsawnwood and s l e e p e r a n and Wood-based panels". Although 1982 y e a r d a t a-
obviously as a r e s u l t of t h e e f f e c t s of o i l p r i c e explosions-
show here t h e r e l a t i v e decreaae of s p e c i f i c v a l u e s and t h e r e l a t i o n s h i p between t h e two p r o d u c t ~ ~ g r o u p s seems t o be proved t h e c o n t r a d i c t o r y n a t u r e of t h e i r r e g r e s s i o n curves.While i n c a s e of nsawnwood and s l e e p e r s " t h e i n t e n s i t y of
c o r r e l a t i o n s t e a d i l y decreased i n time
-
between 1979 and 1982- such a d e f i n i t e tendency can n o t be observed i n c a s e of "wood- based panelsn. The i n t e n s i t y of t h e r e l a t i o n s h i p d i d n o te s s e n t i a l l y change between 1973 and 1982. The 1979 value i n d i c a t e d that t h e reformation of t h e 1964 l e v e l of
r e l a t i o n s h i p i s probable.
On t h e basis of t h e diagrammatic a n a l y s i s of t h e s p e c i f i c consumption indexes of product groups "paper and paper-
boardsw /~iagram 19./ a l s o two d e f i n i t e groups can be determined.
Great B r i t a i n , I r e l a n d , Finland, t h e United S t a t e s , Japarr and New Zealand belong t o t h e first one. It i s c h a r a c t e r i s t i c of t h i s group t h a t t h e i r s p e c i f i c consumption values belonging t o t h e same development l e v e l considerably exceed t h e indexes of t h e o t h e r group. In t h i s c'ase t h e d i f f e r e n c e can n o t be
explained by timber s t o c k s of t h e concerned c o u n t r i e s which exceed t h e average while f o u r out of t h e s i x c o u n t r i e s can c l e a r l y be c l a s s i f i e d i n t o t h e group of timber importin4 c o u n t r i e s . The reason f o r i t i s probable t h e d i f f e r e n c e of t h e consumer h a b i t s due t o which
-
although i n c l o s e connec- t i o n w i t h t h e development l e v e l-
a r e l a t i v e l y h i g h e r l e v e l of s p e c i f i c consumption has developed i n comparison t o o t h e r c o u n t r i e s .The o t h e r 17 c o u n t r i e s under i n v e s t i g a t i o n belong t o t h e second group. Concerning t h e s e 17 c o u n t r i e s t h e
l g y = a
+
b.
l g x-
type of f u n c t i o nproved t o a d j u s t i n t h e b e s t way
-
as i n case of panels-
i n t h i s group as well.
The parameters of t h e Function and t h e c o r r e l a t i o n c o e f f i c i e n t s developed as follows i n c e r t a i n years:
Year a b r
In t h e aggregate i t can be s t a t e d t h a t t h e s p e c i f i c consump- t i o n indexes of t h e s i x c o u n t r i e s having d i f f e r e n t consumption
level have also developed i n close connection w i t h economic growth. It shows that the correlation coefficient calculated o n the basis of t h e indexes i n the four years u n d e r investiga- t i o n
-
besides the y = a+
b.
x type o f linear relationship-
equals t o 0.96.
In the aggregate it c a n be stated that the relationship bet- w e e n development level and specific consumption indexes proved t o be most intensive i n case o f paper and paperboards a m o n g the three investigated product groups. Although the timely reduction trend o f the specific consumption value
-
belongingt o the same development level
-
c a n also clearly be observed, the reduction o f t h e i a e x i s f a r smaller t h a n either i n case o f Wood-based panels" o r wsawnwoodw products.I think that o n the basis o f the diagrammatic and numerical investigations concernirg re lat ionships the c onc lusion c a n clearly be d r a w n that there i s a close conncection between the development level o f certain countries and the specific consumption o f the main t i m b e r manufacturing product groups.
The consumption level i s determined b y the development level t o a great extent.
It i s also c l e a r that t h e closest connection c a n be found i n case o f paper and paperboards,
The o i l price explosions did not essentially change the type o f connection. At the same time t h e y also confirmed and
f onrmlat ed, respectively, in the development o f the consump- t i o n of "up-to-datew t i m b e r product groups what was previously characteristic o f "sawnwood and sleepersw
-
namely the trend of reduction of specific consumption-
belonging t o the same development level-
in time,It can a l s o c l e a r l y be s t a t e d t h a t t h e r e l a t i o n s h i p i s not i d e n t i c a l i n case of wsamwood an s l e e p e r s w and "paper and paperboards i n all OECD c o u n t r i e s . In both product groups two d i f f e r e n t type groups of c o u n t r i e s have developed i n d i c a t - i n g d i v e r s e r e l a t i o n s h i p s .
In case of wsawnwood and s l e e p e r s w t h e timber e x p o r t i n g group of c o u n t r i e s i n d i c a t e s a d e f i n i t e l y d i f f e r e n t r e l a t i o n s h i p .
Its major c h a r a c t e r i s t i c i s t h a t here t h e r e i s a c o n s i d e r a b l y l o o s e r r e l a t i o n s h i p between economic development l e v e l and s p e c i f i c consumption t h a n in case of o t h e r product groups o r groupa of c o u n t r i e s because h e r e "redundance of timberw plays a presumably important r o l e i n t h e development of consumption, In case of "paper and paperboards" a system of t h e r e l a t i o n -
s h i p s of s i x c o u n t r i e s
-
mainly Anglo-Saxon c o u n t r i e s- -
canbe d i s t i n g u i s h e d from t h e remaining 1 7 c o u n t r i e s , Here,
however, t h e reasons can p r i m a r i l y be a t t r i b u t e d t o t h e consumer
h a b i t s and not t o t h e redundance of timber. I I
It i s i n d i c a t e d by t h e f a c t t h a t t h e i n t e n s i t y of t h e r e l a t i o n - s h i p
-
t a k i n g i n t o c o n s i d e r a t i o n t h e t o t a l d a t a s e r i e s of t h e i n v e s t i g a t e d f o u r years-
corresponds t o t h e i n t e n s i t y of t h e r e l a t i o n s h i p of a g r e a t e r group of c o u n t r i e s .F i n a l l y , i t should a l s o be s t a t e d t h a t although t h e c o r r e l a - t i o n c o e f f i c i e n t s
-
e s p e c i a l l y i n c a s e of paper and paper-boards
-
i n d i c a t e an extremely c l o s e r e l a t i o n s h i p , t h e r e g r e s s i o n flmction a d j u s t e d on t h e base of development l e v e l-
due t ot h e i r h i g h s c a t t e r v a l u e s
-
i s n o t s u i t a b l e f o r f o r e c a s t i qt h e development of s p e c i f i c timber consumption i n c e r t a i n
I
c o u n t r i e s .
I
In case of "wood-based p a n e l s w and "paper and paperboards" i t
is expedient t o use t h e r e g r e s s i o n r e l a t i o n s h i p s determined
I
on t h e basis of t h e economic development i n c e r t a i n c o u n t r i e s
I
f o r t h i s purpose,
The relationship between the economic development level and specific consump- tion seems, however, to be improvable
-
if we use the indexes expressing wactualw economic development level for their
determination.
It is shown by the results of the investi- gation which I carried out through the application of corrected GDP values
expressed in ECU and PPS gained as a result of the "Comparison of the GNPs in EEC
countries W e 1/
Besides the application of the GDP values expressed in 1975 US $ in the course of investigations I investigated the relationships c o n c e ~ "paper and paperboards
"
alsowith the help of corrected GDP indexes calcuued in ECU and PPS, In the analyses I used the data of 11 countkies /9 member
countries of the EEC and two candidates/, The diagrammatic illustrations of the relationships are to be found in diagrams 20, 21 and 22/.
The three tables clearly show that on one hand the development of the f'unctions and on the other hand the intensity of the relationship are changed to a great extent if we use consumption values in the corrected GDP function
-
measured in ECU or in PPS-
instead of GDP level expressed in US $.
The most apparent is the way how well the specific indexes of Ireland and Great Britain belonging to a separate group adjust to the consumption indexes of other countries.
The numerical investigation further confirms the possibility of the improvement of the relationship. The application of GDP 1/ Comparison in Real Values of the Aggregates of ESA
Eurostat
,
Luxemburg, 1983values measured by c o r r e c t e d indexes improves t h e i n t e n s i t y of t h e r e l a t i o n s h i p by about t h r e e percantage p o i n t s i n com- p a r i s o n t o t h e GDP values measured i n US$.
I t h i n k t h a t t h i s c o n d i t i o n a l s o j u s t i f i e s t h e f a c t t h a t t h e r e l i a b i l i t y of t h e d e s c r i p t i o n of t h e r e l a t i o n s h i p can f u r t h e r .be improved on one hand by a more a c c u r a t e judgement o f develop- ment l e v e l , on t h e o t h e r hand by a b e t t e r knowledge of t h e
f a c t o r s causing d i f f e r e n c e s .
Budapest, 24th October 1984
DP. Tibor Bencze
References
The Development of Timber Consumption i n Europe and some Extra-European C o u n t r i e s between 1960-1979. Problems and P o s s i b i l i t i e s of More R e l i a b l e F o r e c a s t i n g w i t h S p e c i a l Respect t o t h e O i l P r i c e Explosion.
D o c t o r a l D i s s e r t a t i o n Budapest, 1982
Comparison i n r e a l v a l u e s of t h e Aggregates o f ESA EUROSTAT, Luxemburg, 1983
EUROPEAN TIMBER TRENDS AND PROSPECTS 1950 t o 2000
Supplement 3 t o Volume X3CIX
of t h e Timber B u l l e t i n f o r Europe FOOD AND AGRICULTURE ORGANIZATION Geneva 1976.
J ~ O S S Y , F.
The m e a s u r a b i l i t y and a new measuring method o f economic development l e v e l
Budapest, 1963.
NATIONAL ACCOUNTS OF aECD COUNTRIES 1950
-
1979VOLUME I. P a r i s , 1981.
WIONAL ACCOUNTS OF OECD COUNTRIES 1962
-
1979VOLTJME 11.
DETAILED
Turns,
P a r i s , 1981NAT ION& ACCOUNT of UECD COUNTRIES VOLUME I,
1953
-
1982P a r i s , 1984,
NATIONAL ACCOUNTS of OECD COUNTRIES DETALrnD !rABI;ES VOLUME I1
1964
-
1981P a r i s , 1984,
WORLD FOmST PRODUCT STATISTICS A TEN-YEAR YS-
1954
-
1963FA0 of THE UNITED NmIOETS Rome, 1965.
YEARBOOK OF FOHEST PRODUCTS 1964
-
1975FA0 of THE UNITED NATIONS Rome, 1977,
YEARE3OOK OF FOREST PRODUCTS 1968
-
1979FA0 of THE UNITED NATIONS Rome, 1981.
YEARBOOK of FOREST PRODUCTS 1971-1982
FA0 of THE UNITED NATIONS Rome, 1984,
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