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Iran Exports and Import
Nov. - Dec. 1999, No. 60
By: M. Ebrahimshah
Text: Saint Simon, the famous French scientist, has said that "since we know we are living in an era of transformation, we have decided to prepare a plan to make this passage as fast, as peaceful and as easy as possible". Are these oft-quoted words applicable to all transformation plans? Would it apply to the centralized planned economy that was imposed on the peoples of the USSR, with the consequences that ensued? Clearly, the answer is No. True, USSR was a unique phenomenon: it divided the world into two blocs, and as the hitherto colonized nations gained independence, USSR spread its sphere of influence beyond the boundaries of the Eastern Bloc and gained great popularity worldwide in the 50s and the 60s. Yet, its planned economy could not endure and in the end it collapsed.
A Plan is nothing but a set of objectives and the tools envisaged for attaining them using the available resources-financial and human resources. But when sufficient and accurate data are not available, and national development strategies not clear, how can medium and long term plans be made? A development plan must allocate resources efficiently, with surplus funds going to those areas that would have greatest return. Where are surplus funds in Iran, today?
A look at the history of the Soviet economy over the past 70-80 years, and that of the other countries which copied its policies, would clearly reveal the failure of such planned economics vis-a-vis the open market. Clearly, with these pictures before our eyes, we have to take great care when formulating a development plan and must approach the problem sensiby using methods that are based on both knowledge and experience.
It is obvious today that between the two economic systems mentioned, the open market economy is the better choice, despite it drawbacks. The centralized economy, in which the government plans economic activities, is the biggest impediment to development, whereas the open market can - if the necessary conditions and facilities are there - lead to sustained development.
Considering these point, Iran's policy-makers who must act on the basis of the
country's geo-economic conditions and its resources, may find the points given below of
some interest.
Rehabilitation of national economy
Shortcomings in the socio-economic and even cultural areas emanate from the undesirable
economic structure which is in conflict with the culture and the spirit of the Iranian
nation. Consequently any development thses areas can only be materialized if the economic
structure is properly adjusted. The Chamber of Commerce, Industries & Mines has made
an extensive and indepth research into this issue and has prepared a paper titled
"Universal Ownership or a Step Towards Rehabilitation of the Economic
Structure". This paper has been used as a basis for economic planning in the
country's Third Five-Year Development Plan, and the Chamber believes it offers a way out
of the present economic problems.
In the present circumstances, and considering the events of the recent years, especially the shortcoming the budget is facing, the Third Five-Year Plan cannot be feasible as a fixed program. It can only work if it is flexible and adjusted with changes as they occur, so that it conforms with actual circumstances. A development strategy must include changes in political conditions, and in laws and regulations. In particular the Article 44 of the Constitution must be amended so that the private sector can engage in all field of economic, financial, and industrial activities: if not replacing the public sector, then at least working side by side and competing with it. Naturally, those areas which are solely in the hands of the governemnt in most countries, should remain so in Iran as well.
For effective implementation of a development strategy it would be necessary to coordinate and harmonize all steps towards progress. The Plan and Budget Organization (P&BO) and its subordinate institutions must become fully equipped for this objective. The authorities must beware not to base Iran's development strategy on those of ex-socialist states such as the ex-Eastern Bloc or any of the other centralized economies that has now turned to free market. A proper strategy must be based on circumstances, realities and existing potentials, particularly comparative advantages.
About twenty-five years ago the "Preparation Plan" was formulated by the P&BO based on the potentials of the country. This plan gives the comparative advantages and the potentials of every point of Iran, and is a development strategy in itself. Should this plan be adjusted to present circumstances, reassessed and modified periodically, and implemented with flexibility, it will make all other development plans redundant.