Implicit Exports of Energy Carriers’ Subsidies in Iran

Abstract

Sometimes, economic restructuring can cause the significant conservation of energy. However, any restructuring has specific costs, which may eliminate the benefits of reducing energy consumption. This article aims to measure the implicit exports of energy carriers’ subsidies. To this end, the consumption of energy carriers in Iran is briefly investigated. The implicit exports of energy subsidies are calculated using the input-output table in 2011 (prepared by Statistical Center of Iran) over the period 2008-2016. To do this, the net exports of energy content of goods and services are determined by the price gap approach based on the consumption basket at 2004 prices. The results show that the production costs in the industrial sector has been influenced by welfare effects resulting from targeted subsidies and rising energy carriers’ prices, and a large portion of energy carriers' subsidies has been implicitly exported. Indeed, energy subsidy as an exporting good has served as a source of income for the rich. Thus, one of the roles of energy subsidy in Iran is to provide foreign exchange, which makes it possible to import all kinds of goods and services to the country.

Keywords

• export
• implicit subsidy
• energy carrier
• input-output