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The quantitative impacts of subsidies on steel firms: An econometric analysis of the impact of subsidies on steel firms’ financial performance and crude steelmaking capacity

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  • OECD

Abstract

Non-OECD economies are using seven times more grants per unit of steelmaking capacity for their steel industry than OECD countries in 2021, and increased tenfold the amount of grants per unit of capacity while tripling amounts of below-market borrowings from 2005 to 2021. Identical subsidies can have very different impacts on recipient firms’ performance and capacity depending on whether they operate in an OECD country or not: grants provided to steel firms in non-OECD economies are associated with large capacity expansions, with each additional USD 1 million in grants correlated with capacity increases of about 7 000 to 11 000 metric tonnes, whereas no significant impact was found for OECD countries. This may be due to different subsidisation programme frameworks and different degrees of enforceability of subsidy use. This emphasises the need for dialogue in global fora on best practices on subsidy frameworks to address the most distortive subsidies urgently.

Suggested Citation

  • Oecd, 2024. "The quantitative impacts of subsidies on steel firms: An econometric analysis of the impact of subsidies on steel firms’ financial performance and crude steelmaking capacity," OECD Science, Technology and Industry Policy Papers 167, OECD Publishing.
    • Handle: RePEc:oec:stiaac:167-en
    DOI: 10.1787/cb4e21a6-en
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