Iran’s ranking in 2020 Competitive Industrial Performance Index of the United Nations Industrial Development Organization, using 2018 data, has slipped by two notches to 56 from the previous year’s 54.
With the world average score being 0.067, the country scored 0.052.
UNIDO releases an annual competitive industrial performance report, which benchmarks the ability of countries to produce and export manufactured goods competitively. It provides a graphical summary capturing the competitive performance of 152 economies, relative to their performance in previous years and compared to that of the rest of the world.
It takes into account an economy’s manufacturing competitiveness from value added per capita output, exports and value added to the national gross domestic product through manufacturing.
According to UNIDO, industrial competitiveness is key to inclusive and sustainable industrial development. It shapes sectoral specialization and consequent structural change. It also determines the contribution of industry to overall prosperity and long-run sustainable growth.
The CIP Index covers three main dimensions; the higher the score on any dimension, the higher the country’s industrial competitiveness and its CIP Index.
- Capacity to produce and export manufactured goods: This dimension provides a comparable measure of a country’s manufacturing production for either local or foreign consumption. It is assessed by (1) manufacturing value added (MVA) per capita and (2) manufacturing exports per capita.
MVA per capita in Iran dropped from $679 in 2017 to $652 in 2018. The country scored 0.024 (with the world average score being 0.076) and ranked 82 in MVA Per Capita Index in 2018 compared with its previous year’s rank of 78.
The country ranked 83 in Manufacturing Export Per Capita Index in 2018, the same rank it held in 2017. It scored 0.016, considerably lower than the world average of 0.103.
- Technological deepening and upgrading: This dimension assesses the types of goods a country’s manufacturing sector produces. Because technology-intensive goods create technological spillovers and reduce vulnerability to price shocks, producing them and exporting them are rated as having higher expected benefits than producing lower-tech goods. This dimension is taken into account by (1) industrialization intensity, which captures the role and technological complexity of a country’s production and (2) export quality, which captures the technological complexity of the export bundle.
The intensity of industrialization is measured by the arithmetic average of the share of MVA in GDP and the share of medium- and high-technology activities in MVA.
The share of resources, low-, medium- and high-tech sectors in the country’s total MVA (i.e. $53.3 billion in constant 2015 US dollars) stood at 65.8%,7.9%, 25.5% and 0.9%, respectively.
Resource-based, low-, medium- and high-tech sectors accounted for 30%, 4%, 12% and 0% of the country’s accumulated manufacturing exports.
Iran ranked 35th in Industrialization Intensity Index with the score of 0.445 in 2018, higher than the world average of 0.323. The country ranked 36 in 2017.
The quality of exports is measured by the simple formula of the share of manufactured exports in total exports and the share of medium- and high-technology products in manufactured exports.
Iran ranked 99 in Industrial Export Quality Index, the same it held in 2017. It scored 0.380 compared with the world average score of 0.514.
- World impact: The more a country participates in global markets, the higher its ability to benefit from agglomeration and scope and scale effects, perhaps attracting shared infrastructure investments and expanding trade agreement negotiating power. The world impact dimension is measured by the country’s impact on (1) world MVA and (2) world manufacturing exports.
Iran ranked 34th in Share of World Manufacturing Value Added Index with a score of 0.014, with the world average score being 0.023. The country was placed 32nd in 2017.
The country ranked 41st in Share of World Manufacturing Export Index with a score of 0.022, with the world average score being 0.039. The country ranked 40th in 2017.
The CIP Index can assess a country’s industrial performance across the three dimensions and benchmark it against the country’s direct competitors or regional neighbors.
By highlighting areas in which other countries achieve higher CIP scores, the index can guide policies for future development. Or by analyzing the manufacturing sectors of countries that perform poorly, it can highlight inefficiencies in allocating factors of production, such as labor and capital.
The top quintile of the CIP Index consists almost entirely of industrialized economies (Germany, China, Republic of Korea, the United States and Japan), while a majority of least developed countries are concentrated in the bottom quintile.
Iran is ranked as an emerging industrial economy in the upper middle quintile of CIP.
The United Nations Industrial Development Organization is a specialized agency of the United Nations that assists countries in economic and industrial development. It is headquartered at the UN Office in Vienna, Austria, with a permanent presence in over 60 countries.
As of April 2019, UNIDO comprises 170 member states that set the organization's policies, programs and principles through the biannual General Conference.
