Unfolding the price effects of non-ferrous industry chain on economic development: A case study of Yunnan province

Abstract

Price changes in the non-ferrous metal industry affect economic development, especially in resource-rich regions. However, the degree of price fluctuation differs among sectors in this industry. These differences would mislead policy makers on formulating policy about the long-term development of economic and industry. Existing studies do not present the whole feature picture regarding the effects of price changes in the non-ferrous metal industry. This paper analyzes the segmented effects of prices in the non-ferrous metal industry chain on economic development in Yunnan province, China. The effects caused by price changes in the mining, smelting, and processing sectors were studied using a static computable general equilibrium model with a looping algorithm to avoid omitting the key point of price. Furthermore, the relationships between sectors are discussed by categorizing the effects into crowding-out and pulling effects. Considering the situation of non-ferrous industry in China, the scenarios of price change between −30% and 30% in different sectors of the non-ferrous metal industry were developed. The results show that decreases in the smelting price benefit regional economic development and international trade. Price changes in the mid-stream smelting sector generate more pulling effects than changes in other sectors. This suggests that regional economic development can be promoted by adjusting the smelting price of non-ferrous metals in regions with abundant non-ferrous metal resources. Moreover, as price changes bring different crowding-out and pulling effects among sectors, new price-related policies should consider the effects on other sectors of the industry.