Domestic Economy
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Impacts of Urbanization

As the number of Iranian households nearly quadrupled over 40 years, urban families saw a sixfold increase whereas rural families only doubled
Nomads in Iran annually produce 190,000 tons of red meat, accounting for 25% of the domestic red meat production.Nomads in Iran annually produce 190,000 tons of red meat, accounting for 25% of the domestic red meat production.
The role of rural economy and agriculture in Iran’s gross domestic product has been shrinking over the past few decades

Iran’s villages are being deserted by their inhabitants slowly but steadily.

In a ceremony held on October 7 to mark the National Day of Village and Nomads, the head of Planning and Budget Organization of Iran and government spokesman, Mohammad Baqer Nobakht, added that in the fiscal 2016-17, the rural population of the country stood at 20,466,000, down 3.3% compared with five years before.

Nobakht, who is also an economist, blamed the depopulation of rural areas on changing urban-village demarcation and migration of rural residents to cities.

According to the Statistical Center of Iran, in the fiscal 1976-77, there were 3.265 million urban and 3.446 million rural households in Iran. Four decades later, urban families exceeded 18.125 million while the number of households living in rural areas stood at nearly 6 million.

In other words, as the total number of Iranian households nearly quadrupled over 40 years, urban families saw a sixfold increase whereas rural families only doubled.

Findings of the recent National Population and Housing Census show that in the past five years (March 2011-16), the urban population increased by 2.6%, accounting for 74% of the total population. The whole thing suggests an unbalanced distribution of population in the country.

So, should rising population of cities be viewed as a potential danger for rural areas and their economy? Eminent Iranian economist, Hossein Raghfar, believes so.

“In societies like Iran where the economy is not built upon advanced technology and is dependent on villages, the emerging phenomenon of weakening rural communities would bring about adverse effects,” Raghfar told the Persian weekly Kargadan.

 

   Lure of Urban Culture, Consumerism

“The main reason behind the role change of villages is the infiltration of urban culture and consumerism in rural areas. We need to accept that urban lifestyle is appealing for many young people living in rural areas and that fosters migration. Any form of undermining rural life translates into further reliance of the country on food imports and jeopardizes food security,” he said.

Referring to the shrinking role of rural economy and agriculture in Iran’s gross domestic product over the past few decades, Raghfar said the problems of poverty and unemployment in rural areas, which are other reasons behind rural migration, have their roots in the agriculture becoming a totally unprofitable occupation.

The Statistical Center of Iran has put Iran’s economic growth in the last fiscal year (March 2016-17) at 8.3%. The agriculture sector (fishing, forestry, husbandry and farming) grew by 5% while industries (oil and gas extraction, mining, energy and construction) and services (hospitality, retailing, transportation, communications, education and health) registered an 11.3% and 7.1% growth respectively.

“On the other hand, illiteracy, which is the product of poverty, reduces agricultural productivity. Currently, water resources are under major stress due to unscientific agricultural practices,” Raghfar said.

Noting that there is an inextricable connection between farming and villages, the economist said inhabitants of rural areas were less likely to head for the towns and cities where jobs were more plentiful, whenever more attention was devoted to the farming sector in the past.

“Employment in the agriculture sector would not only guarantee food security, but would also prevent the growth of informal economy and social ills in big cities and their suburban areas,” he concluded.

According to Karamali Qandali, the head of Nomadic Affairs Organization, nomads in Iran produce 5.7 million tons of goods every year, mostly livestock products and handicrafts.

“They produce 190,000 tons of red meat per year, accounting for 25% of the domestic red meat production,” he said, adding that Iran has some 1.2 million nomads.

  $1.5 Billion in Cheap Rural Loans

The government of President Hassan Rouhani considers promotion of development and creation of jobs in rural areas as its top priorities and as a solution to impede rural migration to cities and increase their contribution to economic growth.

On Tuesday, legislator Ali Akbari said the parliament has allowed the government to take out $1.5 billion from the National Development Fund of Iran to provide cheap loans to residents of rural, nomadic areas and cities with less than 10,000 people in the current fiscal year (March 2017-18) for creating jobs in those areas.

“Hopefully, the initiative would help reduce the outflow of people from rural areas to the cities and suburban areas,” he said.  

The unemployment and economic participation rates for rural areas stood at 8.9% and 42% for rural areas in the last fiscal year and reached 13.7% and 38.9% in urban areas respectively.

 

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