Empirical Evidence on Determinants of Biofuels Production: Implications for Developing and Developed Economies

John Paul D. Antes
Sugar Regulatory Administration, Philippines

Brazil and the United States continue to lead the movement towards the development and utilization of biofuels in the global market. Other countries in Asia were also among the most attractive economies for investment in biologically renewable sources of energy such as bioethanol and biodiesel, namely, China, India, Indonesia, Thailand, and to some extent, Malaysia, and the Philippines. Utilizing 10 years (from 2000 to 2009) of macro data from these top biofuel producing countries provided by the U.S. Energy Information Administration, the World Bank, and United Nations Food and Agricultural Organization, this research attempts to determine the interaction of existing macro-level determinants vis-à-vis the countries’ levels of development, and to assess Foreign Direct Investments (FDIs) and Research and Development (R&D) as additional determinants of biofuel production through empirical evidence. This study concentrates on the top 17 biofuel-producing nations leading the 2007 and 2008 Biofuels Country Attractiveness Indices commissioned by Ernst & Young. Apparently, these countries have existing markets, infrastructures and legal framework to support the development and utilization of renewable biomass energy particularly the bioethanol and biodiesel. A discussion on the implications for developed and developing economies is provided as part of the conclusion and recommendations.