Abstract:
Although the implementation of targeted energy subsidies plan has been considered by policymakers since the First 5-year Economic, Social and Cultural Development Plan in Iran, it is only partially implemented in 2010. This issue has great importance for industry sector that has benefited from subsidized energy prices. This research attempts to investigate the possible impact of implementing Subsidy Reform Plan on manufacture of non-metal mineral products industry by using Artificial Neural Network approach. This investigation focuses on new entered firms into this industry as one of the most energy intensive industries. The results indicate that by replacing subsidized prices with electricity real price, the consumption of this energy carrier will generally decline by 16 percent. Despite this, the large entrance of new firms has raised the energy consumption in some years. Therefore, the results show that targeted subsidies plan does not have a large impact on energy consumption in non-metal mineral manufacturing industries. Furthermore, we find out that the impact of this policy depends on combination of firms in each industry.
Machine summary:
The Impact of Targeted Subsidies plan on Combination of Energy Consumption in Iran: The Case of Non-Metal Mineral Manufacturing Industries Mohammad Ali Feizpour Department of Economics, Business School, Yazd University, Yazd feizpour@yazd.
This research attempts to investigate the possible impact of implementing Subsidy Reform Plan on manufacture of non-metalmineral products industry by using Artificial Neural Network approach.
Based on this plan, transfer payments of government for energy that had been done for holding down production costs and thus controlling the market price indirectly were removed and as substitution, domestic sale prices of gasoline, gas oil, fuel oil, kerosene and LPG and other oil derivatives, considering the quality of energy carriers and the associated costs (including transportation, distribution, taxes and legal duties) was determined in a way that by the end of the fifth Five-Year Economic, Social and Cultural Development Plan of the Islamic Republic of Iran not be Less than 90 percent of the Persian Gulf FOB price.
Thus, with specificity of the position of manufacturing industrial sector in Iranian economy, this research attempted to evaluate the real impact of implementing Subsidy Reform Plan on possible change in combination of energy consumption in newly-established firms of manufacture of other non- metal mineral industry (ISIC code, 26) as one of the most important industries of Iran.
For example, Hope and Singh (1995) in their study entitled "The increase of energy carrier prices in developing countries: a case study of Turkey, Colombia, Zimbabwe, Indonesia, Ghana, and Malaysia" investigated the impact of increased energy price on variables of poverty, inflation, growth, national income, and industrial competitiveness during 1980-1990.
This research attempts to investigate the possible impact of implementing Subsidy Reform Plan on manufacture of non-metal mineral products industry by using Artificial Neural Network approach.