Saving Iran’s Industries

As a result of problems grappling the entire Iranian economy, Iran's industrial sector is struggling with an array of difficulties as well as some unique challenges of its own. 
What deserves attention in the long run is the lack of modern infrastructures, which have become an inseparable part of every productive activity. Our industry is out of touch and if it cannot compensate for this backwardness, it will inevitably have no standing in regional and global equations. This will happen unless the economic policymaker prioritizes the country’s interactions with the world, economist Hossein Abbasi prefaced an editorial for the Persian economic newspaper Donya-e-Eqtesad with this note. A translation of the text follows:

In Search for Better Goods

The most important feature of industry is that its products are at the frontier of knowhow and technology. 
With the advent of Industrial Revolution, knowhow advanced technological development in the field of industrial production. The key to understanding the economic aspect of Industrial Revolution is that more resources were used at much lower cost in the production process to produce many more goods of higher quality at an affordable price by a much larger segment of society. 
In the two centuries that have passed since the beginning of the Industrial Revolution, new technology has led to the development of new industrial products. This trend, with the expansion of the internet and the incredible reduction in the cost of communications, has boosted both industrial production and consumption.
Add to this the tradable nature of industrial products, which makes their markets global. Today, in most parts of the world, products are being used, the substantial parts of which are not produced locally. Industry has never thrived behind closed doors and it will never thrive that way in today's world. If it was possible, our automobile industry should have conquered the world by now. 
Industrial production worldwide takes place in a highly competitive field. A big race is underway to make production processes more efficient and less expensive. If industrial companies cannot use cheaper resources, they are doomed to leave the field to more efficient companies. That is why a huge part of industrial production of advanced countries is sourced in developing countries where access to cheap labor is easier.
These companies spend huge amounts of money on research and development to improve production processes so as to not fall behind their competitors. Commercial, accounting, management and legal departments in industrial companies ensure the accuracy of the company's performance in international markets. 
Smaller industrial companies in developing countries use specialized management, commercial and accounting services that are familiar with international rules to produce products suitable for today's markets. In other words, the core of industrial production is not reduced to the machine, but the learning process is focused on supplying better goods at a lower cost.

Uninterrupted Flow of Goods

This process requires extensive infrastructures, such as roads and ports, as well as water, electricity and gas utilities, which are known as essential supplies for industrial development.
A large part of these infrastructures are not provided by economic enterprises, but governments have the duty to provide them or at least provide the basis for their production. 
Industrial production has been transferred from developed countries to developing countries, but it only succeeds when countries are able to provide these infrastructures without interruption. In addition, the Covid-19 pandemic, which disrupted the flow of the supply chain, showed us how much our lives depend on the uninterrupted flow of goods, services and information. 
What is becoming more important day by day is the use of modern communication infrastructures that have been increasingly transferred to the virtual world. Today, having a website specially designed to provide useful information in a language and form usable by potential customers is like being literate. The increasing use of machine learning, which is capable of dramatically improving production and service delivery, reminds us that without the use of these infrastructures, it is almost impossible for industrial production to thrive.

Maintaining Competitive Edge

Perhaps until 30 years ago, the Iranian producer of an industrial product such as shoes could compete with the Turkish producer, but this competition is getting tougher by the day and without access to the communication infrastructure, it will become impossible in the near future. 
The Turkish manufacturer can buy the materials necessary for shoe production from the global market and be sure that these materials are available without interruption. He can use the legal services of a company in London to ensure the accuracy of his documents, and a company in New York to prepare accounting documents or extend insurance services. It can use a Swedish marketing company to know its customers in India and use a Chinese company to send its products to the global market.
It can use elite Iranian engineers and programmers working in the UAE to improve its production process. Most importantly, the cost of communicating with these sources is close to zero. The product it produces, both in terms of quality and price, is superior to a shoe produced without access to these facilities. Sooner or later, Turkish shoes will take over the Iranian market, either in the form of official imports or contraband, as is the case with many industrial products.
Access to low-cost and extensive communications with the world is necessary to launch industrial production at the global level. Some of the requisite facilities are as follows:
Having an internet speed that is in line with current world standards is the most essential and indispensable element of a modern communication infrastructure. Operating at the international level without access to such communication infrastructures is a joke. Add to this international financial, legal and commercial facilities to get an acceptable modern infrastructure.

Price Advantage

In the past few years, economic problems, including incorrect currency policies, piled on Iran's political problems, including international sanctions, to create huge crises in Iran's economy, which eventually appeared in the form of near-zero growth for more than a decade. Recently, the rise in foreign exchange rate, accompanied by strong impulses, caused many problems, but also created a relative price advantage for Iran's industrial producers. 
Rumors indicate that some industrial sectors have been able to take over a part of the domestic market and segments of markets in neighboring countries by relying on this price advantage. This is definitely positive and hopefully, foreign exchange policies will not take away this advantage from Iranian producers.
In the long run, what matters is that industrial growth requires a good grasp of global conditions under which industrial producers operate. Our world is changing at an incredible speed. Learning from these changes for our artisans requires a constant presence in this changing world. Today, this presence is a necessity and a case of survival. 
If the economic policy were to prioritize the survival of industry, most likely, the goal would be to establish important communications infrastructure in place so that our industry could learn from the experience of others and find its way.