Tehran, Iran - Iranian papers are busy debating the economy. And there is a lot to discuss: a very high rate of real growth (at more than 5% over the last year). We are debating what to do about creating even more value-added activity. All of this takes place within a structural shift of the economy toward increasing liberalization.
An aggressive privatization program is slated to begin next year. Everything is set to go: Telecom companies, steel mills, banks and hotels and insurance companies. The government is busy with setting up regulations and shifting its foothold, and mindset, from being the owner and the operator to the regulator. Decisions are made after consulting the Parliament and debates are broadcast live on the national radio.
Retirees in state-owed companies are now being replaced with private sector contractors (instead of replacing them with yet more state employees). In a country where the government (and the people) are used to having strong state intervention, this shift isn't easy. It's a challenge to satisfy all points of view about income distribution.
The Iranian government has always been the main player in the national economy, since even before the Revolution. The private sector has typically enjoyed special incentives and permission granted by state-owned banks for favored projects. Needless to say, as such incentives are now removed and the field is flattened so opposition to further liberalization can also be heard from the privileged few.
Implementing decisions and policies may be easier said than done. Some 17 years later, Eastern European countries are still struggling with the same problems Iran is.
The potential of Iranian growth is reduced as many abroad are busy painting a scary image of Iran in the hopes of keeping foreign investors away. That may well be a blessing in disguise. It makes all Iranians work harder and plan shrewdly, if only to keep away "hot money" speculative players. The record of such players is nothing more than a long list of highly indebted nations stuck in a mode of thinking of "emerging markets" that never seem to actually "emerge".
Against all odds, the Iranian economy continues to register a significant rate of growth. Growing pains are part of the package. Just recall all the bad publicity that China suffered some 15-20 years ago. They may well be a guide to what is yet to come.
Please e-mail PostGlobal if you'd like to receive an email notification when PostGlobal sends out a new question.
Email Me | Del.icio.us | Digg | Facebook
