Misguided policies rooted in command economy and unscientific ideological approaches are to blame for the economic cul-de-sac in which Iran remains stuck for years; the Iranian government needs to start anew and see the realities as they are.
This was stated by Mousa Ghaninejad, veteran economist and journalist, in an article for the Persian economic daily Donya-e-Eqtesad. A translation of the text follows:
The Ministry of Industries, Mining and Trade has unveiled its goals for the fiscal 2022-23. That’s a commendable practice. Every organization has a mission and goals to achieve; it must employ the right tools and be accountable for its performance.
There are various types of organizations; they should not be simply compared with each other. A private sector-owned enterprise is an organization with specific goals; if the managing directors of these enterprises fail to employ the right tools, they must be accountable to their shareholders. The directors of private sector companies are, in fact, the representatives of shareholders. State-owned companies, however, are not duty-bound to be accountable.
In advanced countries, public office holders and government officials have to be responsive to their parties; after all, their mission is to implement their parties’ programs.
More important than the party is the public opinion that monitors the performance of governmental organizations through independent, influential and free media.
Statistics show that Iran’s economic growth was close to zero and the formation of gross fixed capital (adjusted for inflation) was negative during the 2010s. It is clear that if such a situation persists, we cannot expect high growth figures like 8% for the current year, unless significant structural reforms are introduced
Regrettably, in our country, just like many other third-world countries, there’s no such thing as a party system and the public opinion does not wield enough influence because of restrictions on media freedom. That’s why state companies implement their misguided policies without being taken to task. You can now understand why Iranian government officials make promises of providing jam tomorrow without any commitment to supply bread and butter today.
The Industries Ministry’s report on the fiscal 2022-23 goals is brimming with highly improbable promises whose makers will shirk away from accountability when the time is up. Iran’s economic struggles are beyond this issue, though.
The ministry sets goals for the country’s economy from agriculture to industries to mining to services sectors. The belief that one governmental institution like the Plan and Budget Organization has the ability to supervise and set goals for every aspect of an economy is nothing but a delusion. But like any other delusion, it can affect the realities in an adverse way.
The duty of government organizations, including ministries, is to lay the groundwork for the economic and social activities of citizens, and not to plan for or set objectives for their activities.
It may be argued that the goals set by Industries Ministry are the projected results of it laying the groundwork and cannot be considered interference. Even if this supposition was true, you might ask, based on what groundwork has the ministry predicted to achieve an 8% economic growth for the whole economy and 12.5% growth for the industrial sector?
Statistics show that Iran’s economic growth was close to zero and the formation of gross fixed capital (adjusted for inflation) was negative during the 2010s. It is clear that if such a situation persists, we cannot expect high growth figures like 8% for the current year, unless significant structural reforms are introduced. But the fact is that paltry economic reform has taken place ever since the new government has taken office.
Some may argue that the “package of incentive policies and the removal of barriers in the way of production” unveiled by the Industries Ministry last winter is the basis for these reforms. The probe into this package shows that the implementation of its provisions won’t trigger production; it may even cause more problems for the national economy.
This package has been prepared based on a completely ideological and unscientific approach; its policies have already been tested and failed. By turning a blind eye to the real problems of the Iranian economy, you cannot expect a miracle to happen.
The frustrating impasse that the Iranian economy is currently facing is the outcome of a host of misguided policies rooted in command economy and unscientific ideological approaches. One must start anew and see the realities as they are. With eyes shut, you can’t see where you’re going.
