In recent years, Iran’s decision-makers prioritized the issues of supporting production and economic development, and devised policies to meet these goals. However, slogans and economic discourse arising from the policymaking apparatus regarding production have not led to practical results.
Barzin Jafartash, an economic expert, prefaced his write-up for the Persian daily Donya-e-Eqtesad with this note. A translation of the text follows:
The government’s mandated pricing is the first and perhaps the most obvious anti-production policy. A communiqué issued on Sept. 1, 2018, by former industries minister paved the way for the pricing of all manufactured and imported goods by the Consumers and Producers Protection Organization.
According to Hossein Harvarani, an expert with the Majlis Research Center, 15 governmental bodies are in charge of pricing. The government sets the prices of a large number of goods and services. This practice, particularly under the current inflationary conditions, inflicts huge losses on the production sector.
Introducing constant changes in trade policies is another anti-production policy of the government. For example, the ban on the export of agricultural products following the increase in the price of these products in the domestic market is one of the main factors leading to losses in the agricultural sector. That the government bans the exports of kiwifruits, citrus fruits, tea, rice and even livestock at certain times deprives farmers from the possibility of making plans for the future.
Alinaqi Alikhani, Iran’s economy minister in the 1960s, spoke of an interesting point in those years, which is still true about Iran’s economy.
Referring to the then government opposing the export of livestock to Persian Gulf states, Alikhani said Iran should accustom the Arabs of Persian Gulf to lamb produced in Iran’s Zagros to promote exports and the country’s livestock industry, but in case of a domestic shortage of meat, people should use farmed or imported meat.
This idea was unpopular then and even now. The incessant ban on the export of various goods and products, from meat and chicken to apples, onions and kiwifruits, indicates that “current consumption” is still preferable to “production, investment and economic development in the future”.
In another example, we can refer to the government’s response to the lack of electricity in the summer or natural gas in the winter. The government opts to cut off the energy of industrial towns and manufacturing companies in both events. Such an approach shows that the economic policymakers prioritize consumption and consumers over production and producers whereas in the absence of production, there would be no money to spend.
The distribution of oil revenues and other natural resources partially compensated for the underdevelopment of the production sector in the past. With sanctions and the decline in government revenues, the distribution policies have become restricted and the existence of a strong and developed production sector has become a necessity.
The above examples show that despite sloganeering about extending support to the production sector, the economy policymaking apparatus is anti-production in practice.
Manufacturing companies have to tolerate the government’s anti-production policies besides the unfavorable macroeconomic climate such as the instability of exchange rate and high inflation. Many macroeconomic problems are stemming from the weakening of the production sector.
In fact, the government’s anti-production approach has created a vicious cycle [weakening production, decline in purchasing power, more price and regulatory controls, weakening production], which is destroying the foundation of the country’s economy.
According to some development experts, the effect of power distribution structures [political establishment] on policies and institutions is more than slogans and ideas; it seems that this point is also true regarding the issue of giving support to production.
