The current economic problems and crises are the consequences of the lack of entrepreneurship and industrial underdevelopment in Iran, which will hinder the realization of the seventh five-year development plan (from the fiscal 2023-24 to 2027-28), which should be a transformative plan for achieving sustainable development in the country, the head of the High Council of Entrepreneurs said.
Speaking to the Iran Chamber of Commerce, Industries, Mines and Agriculture, Amin Shakeri went on to blame the same factors for the economic crises such as the decline in economic growth, the surge in inflation and poverty rates, the widening class gap and the fall in employment.
“Obviously, due to the prevalence of these conditions, the seventh plan will not be realized,” he added.
The official noted that in development literature, no component is more important than the dynamics of relationship between the people and the governance.
“The seventh development plan is the five-year economic, social and cultural development plan of the Islamic Republic of Iran which, while strengthening the relationship between the people and the government, should reduce the economic crises to an acceptable level and provide the basis for the sustainable development of the country,” he said.
Growth and Development
Shakeri said many economists differentiate between growth and development.
“In the definition of ‘growth’, more emphasis is placed on economic and quantitative parameters such as annual income or the amount of production, but on the other hand, ‘development’ includes fundamental changes and changes in growth. Therefore, the scope of development is wider than growth and it is also a multidimensional process that, in addition to improving production and income, also includes other fields.
In Iran, he recalled, after the 1979 Islamic Revolution, six development plans have been formulated and implemented and almost none of them, especially from the fourth to the sixth plans, have achieved their goals.
“Even after more than seven decades of experience in development planning, there is still a gap between expectations and results in development planning in Iran,” he said.
Lack of Reforms and Elusive Goals
Shakeri said capital flight, the population crisis, pension funds, water and environmental issues, outdated technology and reduction in productivity, lack of financial resources to solve super-challenges and the failure to solve regional and international issues are other challenges facing Iran’s economy.
“The solution to each of these crises requires deep structural and institutional reforms and needs a change of attitude in the way of economic governance. The economy is currently the most important issue of the country,” he said.
He pointed out that the policy clauses in the seventh plan have been reduced compared to the past plans, which will make monitoring and evaluation easier.
The 7th FYDP mainly revolves around three key issues of economic progress combined with justice, achieving 8% economic growth and single-digit inflation in the next five years. Other economic goals set by the plan include an average oil export growth of 12.4%, the average growth of non-oil exports of 22.6% and the average growth of liquidity of 20.4% and in the final year of the program, the growth of 13.8%.
“According to this plan, in order to increase the production capacity of oil, natural gas and petrochemical products and to maintain the current capacity, there is a need to invest about $250 billion, and the realization of these goals requires the removal of obstacles to the development of entrepreneurship, production and industry,” he said.
“The experience of Iran's economy shows that the goals and expectations of the past plans have not been realized. This requires a fundamental assessment. While achieving an average economic growth of 8% has been the goal over the past 20 years in all upstream documents, in actuality during the past decade, Iran's average economic growth was 0%, the average inflation rate was 26% and investment rate was at -5%. Therefore, we have completely distanced ourselves from our competitors like Turkey and Saudi Arabia.”
Causes of Inflation
The official said inflation was initially caused by a double imbalance (i.e., budget and trade deficits) and gradually turned into a triple imbalance (with the Addition of banking imbalance) and recently it has been exacerbated by the pension fund imbalance and liquidity growth.
“The development plan is a tripartite upstream document devised by policymakers, planners, managers and beneficiaries. From this point of view, the effective presence of representatives of the private sector and economic organizations in realizing the goals of development programs is very important so that the opportunity to help the economy and society is not lost,” he said.
He believes it is necessary to redefine the role of private sector as a main beneficiary of development plans in the general policies of the 7th FYDP in order to formulate a practical and effective development plan, stressing that the government should act as a regulatory and facilitatory institution, and provide space for private sector players.
“Subsequently, the policymaking and planning system in the country should also act in such a way that an operational and executive framework is defined for the realization of the goals of this important development document, so that its programs do not have an idealistic approach in which we witness a significant and noticeable deviation in operation and results,” he said.
“I believe that the transformation of the economy starts with the democratization of the economy and entrusting affairs to the people, and the government should stop competing with the private sector. Of course, all this can be realized through a common approach, with the government and the private sector trusting each other. Economic development strategies will be realized by trusting the private sector. The 7th FYDP is the last chance to realize the goals of the Vision Plan [a broader development document of Iran], therefore, the discourse of the development model should help shape a national effort to realize it. In general, the seventh development plan should be a transformative plan for achieving sustainable development in the country.”
