In fact, when tariff rate decreases, imported good price will decrease in the country which leads to increase in demand for export. ***effect of decrease in tariff rate of industry and mine sector on key drug variablesĪccording to results of table 2, when tariff decreases in pharmaceutical products, each sector import will increase as a function of tariff rate in that sector according to equation number 16. The operation results in equation number 7( 10). Here the favorability function is a Cobb-Douglas function which is maximized due to a budget equal to pure household revenue (household revenue minus direct tax amount and saving). Household favorability depends on their amount of goods consumption in each sector. Their revenue is obtained from supply location of production factors (labor and capital) added by transmission payments of government to households and pure external moneys received. In order to calculate private sector consumption (households), it is assumed that consumption basket is optimally selected by consumers ( 9). Hence change in tariffs does not change the whole demand of labor and capital, while just transmission of production factors from one sector to another takes place. It is assumed in this article that production factors (labor and capital) are in a state of equilibrium, and the supply of factors is constant ( 7). PNj as additional value price of jth sector, Wh as production factor wage, PSj as supply price of jth sector, and PQi as goods price of jth sector are considered. Finally, we aimed to evaluate the impacts of trade openness on pharmaceutical industry using CGE model. Therefore, studying effects of decreasing import tariff on major variants of drug field is a very important issue. Hence precise recognition of effects and outcomes of membership in the organization will considerably help passing the membership path successfully ( 3). Therefore, Iran’s principal problem in this regard will be summarized in persistent and concentrated effort to make its membership possible with the least expense and the most profit. Since most world countries have joined world trade organization, Iran as a developing country with no significant role and presence of non-oil economy in world economy should not be in isolation from world progress and evolutions ( 6). Generally, the ratio of Rial sale of imported drugs to the drugs produced inside the country has changed from 0.28 to 0.71 in recent years ( 5). Drug expenses of Iran in 2011 have indicated an increase from 276 million to 829 million dollars for imported drugs. Drug expense share is averagely 30% of the whole health expenses among different world countries. Iran’s pharmaceutical industry share is around 2 billion of the 750 billion dollars, while Turkey as one neighbor of Iran has a share of 6 billion dollars ( 1). Naturally, the world market of pharmaceutical industry could be divided into four areas: United States, Japan, Europe, and the rest of the world ( 4). The drug world market during 1998 to 2008 had enjoyed an average growth of about 12%, while the rate is much lower in other industries. It is expected that the drug world sale would go beyond 1 trillion (1043.4 billion) dollars in 2013, and reach 1.3 trillion dollars until 2020 ( 3). Studies of drug status and recent anticipations indicate a progressive trend in world drug market, so that the rate of drug sale around world (world market) has reached 900 billion dollars in 2011 from 309 billion dollars in 1998 (around 2.9 times more) ( 2). In fact, while pharmaceutical industry is a sensitive one, it is an advantageous industry as well ( 1). By spending a lot in order to produce new drug, large pharmaceutical corporations take effort to greatly increase their property. Today, pharmaceutical business is among greatest businesses of the world.
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