The Effect of the Removal of Energy Subsidies in the Competitiveness of Iranian Steel Industries

Document Type: Research Paper

Authors

1Department of Economics, Islamic Azad University, Tehran Central Branch, Iran

Abstract

The implementation of economic projects by targeting the subsidies can have a great effect on the cost competitiveness of the industries and their products. The global steel industry has been considered as a basic key industry in the industrialized countries. It is also among the industries that may be seriously affected by the enforcement of subsidies. This industry, requiring energy and high-tech, demands the capital. Accordingly, the energy input prices affect the cost of production and sales offers. The prime cost is one of the determinants of an industry's competitiveness in the market. The study employed the law enforcement approach to the competitiveness of the industry during the 2007-2012 and combined data (panel data) to estimate the competitive capacity. The results showed that the effect of targeted energy subsidies on the competitiveness of this industry energy has fallen over time.

Keywords