I have started writing in English regularly now. So I thought I should post some of them here. This is my note for Financial Tribune Daily in Tehran on Iran and Afghanistan Trade.
Few countries share a bond that neither history nor politics can break. Afghanistan and Iran share and have shared their unique history and cultural heritage for so long that it is impossible to consider them anything but members of the same family. Thus one feels obligated to consider President Ashraf Ghani’s recent trip to Tehran, a belated Nowruz visit from a relative. The special bond enables the two countries to develop an understanding of each other beyond the clichés and media images. They see in each other true development partners offering each other a host of opportunities for growth and collaboration.
Currently Afghanistan is Iran’s fifth export market with a share of %7 from April 2014 to February 2015 Iran exported more than $2.18 billion worth of commodities and services to its neighbor. One third of these, $690 million, came from the northeastern Khorasan Razavi Province. Iran accounts for 8% of Afghanistan’s total imports. This is truly remarkable when one remembers that the Afghan market is fiercely contested by countries such as China, India and Pakistan with larger production possibilities and bigger populations. All these countries have their own special bonds with Afghanistan. This is a truly competitive market where Iranian and Afghan businessmen forge partnerships despite adverse conditions and rough terrain.
Presently Iran’s annual imports from Afghanistan accounts for only 0.02% of its total import, a value of 13 to $14 million. The trade balance in commodities and services is strongly in Iran’s favor. This is partly because Afghanistan’s manufacturing sector is still in its infancy and its agricultural sector suffers from decades of civil war and armed conflict. One cannot forget that Iran’s market is also aggressively contested by China and Turkey. Both countries have well-developed export-oriented economies with local partners and expert knowledge of marketing tactics. As Afghanistan’s manufacturing sector grows, so does its ability to compete regionally. To achieve full potential both countries must invest heavily in their transportation network, gaining access to each other’s market.
Economic evolution has left its mark on trade relations between two countries. However one cannot deny the fact that Iran-Afghanistan trade has its own unique dynamism and features. When President Ghani arrived in Tehran, a large number of Afghan businessmen were accompanying him. This was a good omen. Political analysts say what they may; businessmen and entrepreneurs do not waste time in finding opportunities for collaboration. Iranian and Afghan businessmen and businesswomen have shown that they are survivors and resolutely committed to the development process. In this trip the events at Iran-Afghanistan Chamber of Commerce and Iran’s Chamber of Commerce highlighted that both sides are committed to expanding their relationship both in scope and in depth.
As Afghanistan’s economy grows, its demand for fuel, high tech products, healthcare, higher education and investment increases. Its export capabilities can also expand to enable it to supply Iran’s eastern markets. Iran is Afghanistan’s natural choice in supplying what its growing economy would need. Both countries share the same language and same understanding of the accumulation process of knowledge and wealth. Iran’s entrepreneurs would share their knowledge and experience with their Afghan counterparts in business development and utilizing the modern management applications to expand markets and to run businesses efficiently.
No matter what happens, Iranians and Afghans know as they share the same history, they share the same future. And that is an exceptional cornerstone to forge and to grow a partnership.
Showing posts with label Iran. Show all posts
Showing posts with label Iran. Show all posts
Tuesday, May 19, 2015
Tuesday, June 04, 2013
The Problem is the Same: Economy
Another piece I wrote for IranOpinion.com on the economic challenges ahead and the significance of the economy in the upcoming election:
As Iran’s presidential election approaches an increasing number of analysts and observers comment on the state of Iran’s economy. The last reports indicate that some segments of Iran’s labor force are experiencing high unemployment rate while the economy is experiencing an increasing inflation rate. The next president faces economic challenges some might consider unprecedented.
Last month Statistical Center of Iran (SCI) announced employment data for the last Iranian calendar year from April 2012 to March 2013, reporting the unemployment rate to be at 12.2 percent, which is almost at the same level with the unemployment rate in the preceding 12 months. According to this report, Iranian youth experience higher than average unemployment rate, 28% for males aged 20 to 24 years old. The youth unemployment varies widely across the country and in some provinces it is reported as high as 50%. The SCI puts the number of the unemployed at 2.9 million, 100,000 more than its last annual report. However several websites report the unemployment numbers to be much bigger, referring to discouraged workers’ effect.
One source of discrepancy comes from the definition of employment, which has changed during the current administration and now it includes individuals who work for at least one hour during the week. Many believe that this definition, which is also used by several other countries, underestimate the unemployment in Iran while overestimating the size of employed population. They argue that given the increasing inflation and reports of business closures and the slowdown in manufacturing, it is logical to see an increase in unemployment rate and not a decrease. However in offering an analysis one has to rely on the available data and observations. The increase in the size of unemployment is evident. Although one might argue the unemployment rate has not increased. One thing can thus be said with certainty: more Iranians need jobs.
According to reports by SCI and Central Bank of Iran (CBI) inflation rate has been increasing at a faster pace in the past two years (read here). A recent report by Majlis Research Center (MRC) warns that the economic growth might fall to -4%. In other words Iran’s economy has begun to shrink. When an economic contraction begins, in the presence of inflation, the only logical conclusion is that the volume of economic activities is declining within the society. This means less investment, less business enterprises and eventually less jobs and employment opportunities. The American and European consumers are only too familiar with this phenomenon; many lost their jobs and even their homes following the global financial crisis of 2007-08. It seems as prices are on the rise the ability of Iran’s economy to create jobs is declining.
Increasing unemployment and increasing inflation rate increase the possibility of hyperinflation in Iran’s economy. This increases the uncertainty investors and businesses face daily in marketplace. Under these circumstances any modest drop or price change could alarm consumers and producers prompting them to become irrational in the marketplace. Consumers will try to buy commodities because they expect them to be more expensive later, producers will be reluctant to sell because they do not know how much the same product will cost them in the immediate future. The outcome will be a vicious cycle of inflation which would discourage manufacturing even further. That means slower job creation and even higher unemployment. In order to prevent this, any administration’s first task is to battle the uncertainty while promoting entrepreneurial endeavors.
A large portion of Iran’s population are younger than 35 years, they require jobs and market stability to make individual decisions in pursuit of their happiness. To provide them with such stability government needs to change course. Its first step could be to adopt higher standards in fiscal and monetary responsibility. The second step should be defining a viable economic target. According to MRC the current administration has been slow in addressing its budget deficit, while increasing money supply via banking system and accepting commitments it cannot fulfill.
When Mr. Ahmadinejad came to power 8 years ago he promised a zero unemployment rate by creating 2.5 million jobs in 2-3 years. Last month in a live program Dr. Nili, an Iranian economist, shared some of SCI reports with the viewers which showed the net job creation from 2006 to 2011 to have been an average of 14,200 jobs per year. The government side produced reports backing its claim, but many agree that unemployment in Iran is on the rise. With the current reports on negative economic growth, it seems the government’s means to address this issue are diminishing as well. However it still can face its challenges by defining a viable economic target. Reducing inflation could be such a target. First it is doable and creates credibility for the government and second it reduces the economic volatility encouraging investment and rational behavior. Iran’s economy can benefit from both significantly.
The question these days is not who will be president, but if anyone could face these challenges and succeed despite sanctions and public mismanagement and structural deficiencies embedded in Iran’s economy? It seems whoever comes to office needs to know his economics 101 pretty well
As Iran’s presidential election approaches an increasing number of analysts and observers comment on the state of Iran’s economy. The last reports indicate that some segments of Iran’s labor force are experiencing high unemployment rate while the economy is experiencing an increasing inflation rate. The next president faces economic challenges some might consider unprecedented.
Last month Statistical Center of Iran (SCI) announced employment data for the last Iranian calendar year from April 2012 to March 2013, reporting the unemployment rate to be at 12.2 percent, which is almost at the same level with the unemployment rate in the preceding 12 months. According to this report, Iranian youth experience higher than average unemployment rate, 28% for males aged 20 to 24 years old. The youth unemployment varies widely across the country and in some provinces it is reported as high as 50%. The SCI puts the number of the unemployed at 2.9 million, 100,000 more than its last annual report. However several websites report the unemployment numbers to be much bigger, referring to discouraged workers’ effect.
One source of discrepancy comes from the definition of employment, which has changed during the current administration and now it includes individuals who work for at least one hour during the week. Many believe that this definition, which is also used by several other countries, underestimate the unemployment in Iran while overestimating the size of employed population. They argue that given the increasing inflation and reports of business closures and the slowdown in manufacturing, it is logical to see an increase in unemployment rate and not a decrease. However in offering an analysis one has to rely on the available data and observations. The increase in the size of unemployment is evident. Although one might argue the unemployment rate has not increased. One thing can thus be said with certainty: more Iranians need jobs.
According to reports by SCI and Central Bank of Iran (CBI) inflation rate has been increasing at a faster pace in the past two years (read here). A recent report by Majlis Research Center (MRC) warns that the economic growth might fall to -4%. In other words Iran’s economy has begun to shrink. When an economic contraction begins, in the presence of inflation, the only logical conclusion is that the volume of economic activities is declining within the society. This means less investment, less business enterprises and eventually less jobs and employment opportunities. The American and European consumers are only too familiar with this phenomenon; many lost their jobs and even their homes following the global financial crisis of 2007-08. It seems as prices are on the rise the ability of Iran’s economy to create jobs is declining.
Increasing unemployment and increasing inflation rate increase the possibility of hyperinflation in Iran’s economy. This increases the uncertainty investors and businesses face daily in marketplace. Under these circumstances any modest drop or price change could alarm consumers and producers prompting them to become irrational in the marketplace. Consumers will try to buy commodities because they expect them to be more expensive later, producers will be reluctant to sell because they do not know how much the same product will cost them in the immediate future. The outcome will be a vicious cycle of inflation which would discourage manufacturing even further. That means slower job creation and even higher unemployment. In order to prevent this, any administration’s first task is to battle the uncertainty while promoting entrepreneurial endeavors.
A large portion of Iran’s population are younger than 35 years, they require jobs and market stability to make individual decisions in pursuit of their happiness. To provide them with such stability government needs to change course. Its first step could be to adopt higher standards in fiscal and monetary responsibility. The second step should be defining a viable economic target. According to MRC the current administration has been slow in addressing its budget deficit, while increasing money supply via banking system and accepting commitments it cannot fulfill.
When Mr. Ahmadinejad came to power 8 years ago he promised a zero unemployment rate by creating 2.5 million jobs in 2-3 years. Last month in a live program Dr. Nili, an Iranian economist, shared some of SCI reports with the viewers which showed the net job creation from 2006 to 2011 to have been an average of 14,200 jobs per year. The government side produced reports backing its claim, but many agree that unemployment in Iran is on the rise. With the current reports on negative economic growth, it seems the government’s means to address this issue are diminishing as well. However it still can face its challenges by defining a viable economic target. Reducing inflation could be such a target. First it is doable and creates credibility for the government and second it reduces the economic volatility encouraging investment and rational behavior. Iran’s economy can benefit from both significantly.
The question these days is not who will be president, but if anyone could face these challenges and succeed despite sanctions and public mismanagement and structural deficiencies embedded in Iran’s economy? It seems whoever comes to office needs to know his economics 101 pretty well
Saturday, September 08, 2012
Romney in Iran
This issue of Tejarat e Farda (Commerce of Tomorrow) weekly in Tehran has a special section on US election, to which I have contributed an article. I have uploaded its cover, which is interesting. I hope GOP does not mind it. This issue covers fundraising process in US election, the future of US economy and the candidates' different approaches to the economy. The text on Mitt Romney's image reads "Mitt Romney comes with structural programs" then in bold "Golden Comeback". Just to give you some idea about Iranian media enthusiasm for US elections!
Tuesday, May 08, 2012
Tat Bank
I am reading the dispatches on Tat Bank, Iran's eighth private bank. The best I can say is that it is going to merge with two recently founded financial institutions to form a new bank called "Mardom Bank". One report speaks of some "irregularities" without further elaboration. Well the positive side of the story is that there is a banking watchdog in Iran. That is comforting, at least partially.
Thursday, March 29, 2012
How Much Darker Should It Get?
Azadeh Moaveni has written a piece for Guardian in which she writes "But the reality is not as black and white as Tehran makes out. American law includes provisions allowing Iran to procure spare parts by applying to the US treasury department for a special licence. Under this provision, Iran applies for what it needs through an intermediary and the parts are installed in a licensed third-country, such as by Lufthansa in Germany. Iran has availed itself of this option in the past, and the treasury has issued nearly a dozen special licences related to its civil aircraft, according to a treasury department official. Given that Tehran is pretending this provision doesn't exist and is declining to use it more aggressively, Washington should make the case that Iran is playing its own cynical game."
I read this part several times and shared it with a few friends. While I have no doubt that Ms. Moaveni's ultimate goal is to reduce the pain and sufferings of Iranian people, I doubt that she has a true grasp of the factual reality which exists on the ground. The truth is that the aforementioned provisions and the procedures to use them are not known. And even if they were implemented in practice, benefiting from them would not be that simple.
First one does not apply to U.S. Treasury on his or her own. The interactions between nations are ruled and governed by national governments. Particularly in Iran where national sovereignty is emphasized on a daily basis such applications without the government's explicit authorization are nothing short of treason.
Secondly even if Iranian businesses apply to be exempted from sanctions on humanitarian grounds on what basis these exemptions will be granted. The public sector is the largest sector in Iran's economy and Iranian government either owns or controls most of the industries in this county.
Third few private entrepreneurs in Iran have the resources to apply for such permits on their own. The financial burden will be too heavy and the process too time consuming. Paradoxically only businesses with government connections and access to government resources could go through this process. Wouldn't this be against the spirit of sanctions?
Since Ms.Moaveni has paid particular attention to Iranian airlines and their plight, I would like to point out a few particulars about this industry in Iran. Iranian airlines are a mix of public, semi-private and private firms. The problem is not lack of parts, it is the age of the existing fleet. Iran is one of the few countries, if not the only one, where one still could board a Boeing 707 or a 727-100 or a 747SP. These are considered classic airplanes these days. Both private and public airlines do not have access to modern aircraft. Even if one or two private airlines in Iran could receive such exemptions one would wonder how they should manage the financial transactions for this process. No banks would accept their wires and Iran banking system is being isolated aggressively. In my last trip to Iran I talked to the director of a private flight school where men and women learn to fly and receive their licenses. The operation was fully private with two women flight instructors. The director was desperate, since he could not get either parts for his light single engine airplanes or replace them with new ones. He told me "We simply do not have the funds to keep bypassing sanctions".
The fact is that the situation does not need to be pictured as black and white. Since it is black. And may be that is why now owning up to it has become a bit difficult.
I read this part several times and shared it with a few friends. While I have no doubt that Ms. Moaveni's ultimate goal is to reduce the pain and sufferings of Iranian people, I doubt that she has a true grasp of the factual reality which exists on the ground. The truth is that the aforementioned provisions and the procedures to use them are not known. And even if they were implemented in practice, benefiting from them would not be that simple.
First one does not apply to U.S. Treasury on his or her own. The interactions between nations are ruled and governed by national governments. Particularly in Iran where national sovereignty is emphasized on a daily basis such applications without the government's explicit authorization are nothing short of treason.
Secondly even if Iranian businesses apply to be exempted from sanctions on humanitarian grounds on what basis these exemptions will be granted. The public sector is the largest sector in Iran's economy and Iranian government either owns or controls most of the industries in this county.
Third few private entrepreneurs in Iran have the resources to apply for such permits on their own. The financial burden will be too heavy and the process too time consuming. Paradoxically only businesses with government connections and access to government resources could go through this process. Wouldn't this be against the spirit of sanctions?
Since Ms.Moaveni has paid particular attention to Iranian airlines and their plight, I would like to point out a few particulars about this industry in Iran. Iranian airlines are a mix of public, semi-private and private firms. The problem is not lack of parts, it is the age of the existing fleet. Iran is one of the few countries, if not the only one, where one still could board a Boeing 707 or a 727-100 or a 747SP. These are considered classic airplanes these days. Both private and public airlines do not have access to modern aircraft. Even if one or two private airlines in Iran could receive such exemptions one would wonder how they should manage the financial transactions for this process. No banks would accept their wires and Iran banking system is being isolated aggressively. In my last trip to Iran I talked to the director of a private flight school where men and women learn to fly and receive their licenses. The operation was fully private with two women flight instructors. The director was desperate, since he could not get either parts for his light single engine airplanes or replace them with new ones. He told me "We simply do not have the funds to keep bypassing sanctions".
The fact is that the situation does not need to be pictured as black and white. Since it is black. And may be that is why now owning up to it has become a bit difficult.
Sunday, March 11, 2012
Neither Shahs Nor Mullahs
Today Bravo is going to broadcast "Shahs of Sunset" a reality show about six Iranian-American men and women or as one of the local radio stations in Atlanta calls them "six Persian-Americans". These not so young individuals live in Los Angeles, home to the largest Iranian immigrant population in the United States. The show is another reality TV production, filled by drama, to use a polite word, and that attractive surreal reality. It is made to entertain. However there is little doubt that it will trade one stereotype, the angry bearded fundamentalist from Tehran, for another one; vulgar, materialistic show-off from "Tehr-Angeles". Neither can possibly be representing Iran or Iranian people.
As I hear the commercials about this TV series filled by "pool parties", "extravagant lifestyle" or "brand orientation" of these characters I could not help but thinking of real Iranians and real Iranian Americans. I cannot help think of my friends in other cities, where they devote their time to their families. These days they are getting ready to celebrate Nowruz. They could be anywhere from Oshkosh, WI to Columbus, SC. Last year a friend who actually lives in Oshkosh told me that she had to spent one whole week preparing decorations and table covers. So the dozen families who live in the vicinity could get together to celebrate the coming of spring. She will not be on this reality TV, since she is really real.
I also cannot help thinking of average Iranian living in Iran. These days I am working on a piece about Iranian NGO and I remember Zahra, a 30 years old mother of a two year old. We met in our Alma mater in Tehran. The NGO was a group of students dedicated to help impoverished children and to assist in their education. Their office was one small room in the student center on campus. While Zahra talked to me about their challenges her two year old son strolled around. The furniture consisted of a very old table, couple of chairs. In a corner two students were packing boxes of hygiene products for the children. Zahra was tired, she had a full time job and It was 8:00 PM. For those kids, who are always absent from news and articles about Iran and Iranians, the show will come as a gross misrepresentation of the truth. They do not care about the brand they are wearing, as long as they are wearing something! So no I am not happy about "Shahs of Sunset".
Roshanak Taghavi has written a great article for CSMonitor describing the dilemma many Iranian and Iranian Americans face. I think "confusion" describes the reaction the best. On one side some think the show provides a fresh insight into Iranian culture, some argue that it is the last stage in Americanization of Iranian Americans. And many are unhappy that their choices are either Tehran or Tehr-Anglese. For one I wonder when the world and the media would see us for who we really are; like anybody else we try to succeed while almost everybody else refuses to see us for ourselves. We are neither Shahs or Mullahs. We are just humans like anybody else and kinda tired of stereotypes.
As I hear the commercials about this TV series filled by "pool parties", "extravagant lifestyle" or "brand orientation" of these characters I could not help but thinking of real Iranians and real Iranian Americans. I cannot help think of my friends in other cities, where they devote their time to their families. These days they are getting ready to celebrate Nowruz. They could be anywhere from Oshkosh, WI to Columbus, SC. Last year a friend who actually lives in Oshkosh told me that she had to spent one whole week preparing decorations and table covers. So the dozen families who live in the vicinity could get together to celebrate the coming of spring. She will not be on this reality TV, since she is really real.
I also cannot help thinking of average Iranian living in Iran. These days I am working on a piece about Iranian NGO and I remember Zahra, a 30 years old mother of a two year old. We met in our Alma mater in Tehran. The NGO was a group of students dedicated to help impoverished children and to assist in their education. Their office was one small room in the student center on campus. While Zahra talked to me about their challenges her two year old son strolled around. The furniture consisted of a very old table, couple of chairs. In a corner two students were packing boxes of hygiene products for the children. Zahra was tired, she had a full time job and It was 8:00 PM. For those kids, who are always absent from news and articles about Iran and Iranians, the show will come as a gross misrepresentation of the truth. They do not care about the brand they are wearing, as long as they are wearing something! So no I am not happy about "Shahs of Sunset".
Roshanak Taghavi has written a great article for CSMonitor describing the dilemma many Iranian and Iranian Americans face. I think "confusion" describes the reaction the best. On one side some think the show provides a fresh insight into Iranian culture, some argue that it is the last stage in Americanization of Iranian Americans. And many are unhappy that their choices are either Tehran or Tehr-Anglese. For one I wonder when the world and the media would see us for who we really are; like anybody else we try to succeed while almost everybody else refuses to see us for ourselves. We are neither Shahs or Mullahs. We are just humans like anybody else and kinda tired of stereotypes.
Wednesday, January 25, 2012
Bridge to Iran
Caty Borum Chattoo has kindly forwarded me an email announcing airing "BRIDGE TO IRAN" which a series of documentaries already produced by Iranian filmmakers on Iran. It reads:
San Francisco, Calif., January 23, 2012 – Against a backdrop of rising cultural and political tensions in Iran, Link TV will premiere its four-part documentary TV series, “BRIDGE TO IRAN,” beginning on February 14 at 7:30 p.m. ET. Presented by Iranian-American host, Parisa Soultani, the series examines issues such as the role of women in Iranian politics, intimate conversations between the exiled former queen of Iran and a former dissident, and the historically powerful role of the arts – particularly theatre and cinema – within Iranian society. In each episode, in-depth discussions with top Iranian filmmakers provide a unique lens into some of the challenges and realities facing Iranians during a time of increased instability – including censorship, sanctions and safety concerns. New episodes will air at 7:30 p.m. ET/4:30 p.m. PT on February 14, 21, 28, and March 6 (with repeat broadcasts); more information about all episodes are available online at www.LinkTV.org/BridgeToIran.
“Bridge to Iran,” a co-production of Link TV and CEM Productions, was developed as a response to the cultural and political tensions that have developed between Iran and the U.S. since the Iranian revolution.
Viewable Online at www.LinkTV.org/BridgeToIran
---I have visited this website. Some of them are great works such as Iran: A Cinematographic Revolution, which reviews Iranian motion picture industry and traditions, We Are Half of Iran's Population by Rakhshan Bani Etemad is a great look into women's issues and challenges insider. Frankly I am lost what a movie like The Queen and I has to say about Iran of today, since it is a biographic work. It might have some value for those interested in Iran's contemporary history, however I do not see how it adds to its viewers' understanding of Iran of 2012.
Overall this is an admirable effort to bring some understanding of Iran to an American audience. However against a backdrop of war the documentaries do not include anything on the human cost of war. Particularly since the memory of Iran-Iraq eight year long war is so fresh and its wounds are still bleeding. Still they offer a uniquely authentic outlook of Iranian cinema and Iranian women issues.
Sunday, June 27, 2010
A Good Article
Rojan Taghavi has written a very insightful article for Guardian "Iran fears falling oil sales – not UN sanctions" She reviews Iran's refining infra structure.
Wednesday, March 03, 2010
Being Silent
I have been silent too long. No excuse for that. So here we go.
Iranian year of 1388 is coming to an end. It was the most eventful year and you need not me to recount. However there is a chance that amidst the political stories the tale of economy was unheard.
The Iranian government is set, and undeterred, to go ahead with liberalization. There are many arguments for it and there are some against, well more against. Some say the critiques are more urban oriented, since they benefit more from subsidization and the rural "majority" are silent. These attribute the silence of rural population to their lack of representation and access to internet.
Although there is some truth to this argument, the word "majority" is a vague one and the definitions of rural and urban are not the same for everyone. Really would a town in rainy north of Iran is as rural as a city in the far south corner of Khorasan, close to Afghanistan border?
The truth is government is set to reduce its obligations. It has reduced the tariffs on car imports, leaving domestic producers vulnerable.
Would it be true to say, this government wishing to accomplish something, anything, spectacular is doing the one thing no other Iranian government would have dared? The future will answer that.
Iranian year of 1388 is coming to an end. It was the most eventful year and you need not me to recount. However there is a chance that amidst the political stories the tale of economy was unheard.
The Iranian government is set, and undeterred, to go ahead with liberalization. There are many arguments for it and there are some against, well more against. Some say the critiques are more urban oriented, since they benefit more from subsidization and the rural "majority" are silent. These attribute the silence of rural population to their lack of representation and access to internet.
Although there is some truth to this argument, the word "majority" is a vague one and the definitions of rural and urban are not the same for everyone. Really would a town in rainy north of Iran is as rural as a city in the far south corner of Khorasan, close to Afghanistan border?
The truth is government is set to reduce its obligations. It has reduced the tariffs on car imports, leaving domestic producers vulnerable.
Would it be true to say, this government wishing to accomplish something, anything, spectacular is doing the one thing no other Iranian government would have dared? The future will answer that.
Sunday, October 19, 2008
Bazar Said "No" to Value Added Tax
Iranian government has introduced a value added tax (VAT) and gave the treasure authorization to collect this new item from businesses and Bazar across the country. The treasury issued an order and set a date to start the collection. Things seemed to be under way however...... .
However President Ahmadinejad's administration underestimated Iranian Bazar greatly. First in Isfahan, then in Mashhad, then in Tabriz and finally in Tehran Bazar closed down and Bazaris went on strike opposing the new tax measure.
Government retreated first by canceling the order temporarily for two months and then for time being. Tehran's Bazar stayed on strike demanding the new measure to be canceled permanently. For a government that talks of bold measures it was not exactly a triumph.
While many debate that VAT is a measure to protect consumers from over taxation and some argue that little time had been spent on preparing the public for this measure, it seems that many miss the point communicated regarding the policy implementations in Iran: You do not mess with Bazar!
An increase in taxes is not something Iranian shopkeepers and Bazar's tradesmen submit to willingly. There was little doubt that they would react to such measure. and It must be noted that they can.
It does not need reminding that Bazar or marketplace is Iran's most ancient economic institution. So its network of connections includes the elite, the clergy, the industrial entrepreneur and the consumer. It is well aware of its connections and its power. It also benefits from the fact that everybody else is convinced that its motivations are purely economical. So Iran's Bazar benefits from that rare luxury that many other institutions lack: maneuverability.
Its reaction to this new measure only confirms this reality. Reacting to a measure that was well intended it communicates a clear message to the administration, in Iran to protect the consumer Bazar is not willing to take on more taxation.
Many might welcome more government's subsidies, the traditional way of disturbing the wealth of oil in the society, but the declining oil prices are not empowering more subsidization either. Government has only two choice ahead: either to sacrifice development for the sake of consumer by diverting its resources or its popularity with Bazar for the sake of its popularity with consumers. Neither is an attractive prospect.
Monday, October 06, 2008
Bail Out Ejects the Free Market in Iran
The history of economic thoughts and economics in Iran reads like ancient Greek tragedies. In a country where all ideas have a political role to play, even if they do not want to, free market and neoclassical economic theories have found themselves at odds with politicians more than once.
In Pahlavi era they were not welcome while a centralist government reigned over economy with a tight grip, and while most of Iranian intelligentsia was inclined toward Socialist and Marxist notions. A free market was equivalent of heresy.
In the post revolution era ideologists and politicians vacillated between absolute control of economy and privatization.
Ironically the first major nationalization program was designed and proposed by Mr. Sahabi a member of the provisional government and Mr. Bazargan’s liberal moderate cabinet. The revolutionaries might have their disagreements over many concepts such as democracy and freedom of speech however they all opposed economic freedom and free market resolutely.
Only recently during Presidents Rafsanjani and Khatami politicians reconsidered their stands and welcome some notions of private ownerships. Development plans called for extensive privatization of industries and a new interpretation of article 44 of constitution was introduced that ended the government’s monopoly in economic activities. It even seemed the most ardent critiques of free market have accepted the necessity of private free market at last.
However the new crisis in American financial markets has fueled the arguments of those who advocate an unlimited role for the government in the economy and distrust free market and free market ideas. President Ahmadinejad went as far as saying that assuming free market regulates the economy is “a great lie that benefits thieves.” There is no doubt that promoting a free economy in Iran has become more difficult.
Such statements are nourished by the fact that many Iranians, intellectuals and politicians alike, are ignorant of economics as a science and believe their experience of economy can substitute analytical tools and methodological studies of the economy. They often confuse the science with the phenomenon and instead of believing in price and inflation as signals believe in them as control instruments of the economy.
For time being many from all parts of political spectrum in Iran refer to the ongoing crisis as the greatest defeat of capitalism, however one wonders what would happen if this crisis forces down the price of oil. Would then a private free market become a good idea again?
In Pahlavi era they were not welcome while a centralist government reigned over economy with a tight grip, and while most of Iranian intelligentsia was inclined toward Socialist and Marxist notions. A free market was equivalent of heresy.
In the post revolution era ideologists and politicians vacillated between absolute control of economy and privatization.
Ironically the first major nationalization program was designed and proposed by Mr. Sahabi a member of the provisional government and Mr. Bazargan’s liberal moderate cabinet. The revolutionaries might have their disagreements over many concepts such as democracy and freedom of speech however they all opposed economic freedom and free market resolutely.
Only recently during Presidents Rafsanjani and Khatami politicians reconsidered their stands and welcome some notions of private ownerships. Development plans called for extensive privatization of industries and a new interpretation of article 44 of constitution was introduced that ended the government’s monopoly in economic activities. It even seemed the most ardent critiques of free market have accepted the necessity of private free market at last.
However the new crisis in American financial markets has fueled the arguments of those who advocate an unlimited role for the government in the economy and distrust free market and free market ideas. President Ahmadinejad went as far as saying that assuming free market regulates the economy is “a great lie that benefits thieves.” There is no doubt that promoting a free economy in Iran has become more difficult.
Such statements are nourished by the fact that many Iranians, intellectuals and politicians alike, are ignorant of economics as a science and believe their experience of economy can substitute analytical tools and methodological studies of the economy. They often confuse the science with the phenomenon and instead of believing in price and inflation as signals believe in them as control instruments of the economy.
For time being many from all parts of political spectrum in Iran refer to the ongoing crisis as the greatest defeat of capitalism, however one wonders what would happen if this crisis forces down the price of oil. Would then a private free market become a good idea again?
Tuesday, August 26, 2008
USD is Gaining on Rial
There has been an increase in USD versus Iranian Rial in Tehran currency exchange markets. However I am not sure if this increase is due to USD gaining against Euro, or it is partially due to inflationary conditions of Iran’s economy. The high inflation usually causes household to seek other ways to save in Iran. The list of investments and savings is topped by purchasing properties and houses, which usually results in an increased in housing prices. The next item is purchasing gold and hard currencies.
An increase in USD value in Iranian markets could be due to increase in popular demand to save in hard currencies such as USD and Euro. I also wonder if sanctions have something to do with it, by limiting the number of suppliers of USD to Iranian merchants and private sector. One simple increase in an economic index and so many questions!
An increase in USD value in Iranian markets could be due to increase in popular demand to save in hard currencies such as USD and Euro. I also wonder if sanctions have something to do with it, by limiting the number of suppliers of USD to Iranian merchants and private sector. One simple increase in an economic index and so many questions!
Sunday, July 13, 2008
The French Out and The Russian In!
Following Total decision to abandon developing Southern Pars, Gazprom, Russian natural gas monopoly OAO, stepped in to fill the void. Its Chief executive Alexei Miller met Iranian President Mahmoud Ahmadinejad in Tehran to talk business. Later the heads of Gazprom and National Iranian Oil Co. discussed ''creating a joint enterprise to carry out exploration and production of gas and oil fields, construction of oil and gas processing facilities, and transport inside Iran”.
This development increases the cooperation between Iran and Russia in the energy sector, a field where Russia is seeking to play a more prominent role. It also reduces the mutual interests between Iran and EU. This adds to incessant decline in the volume of trade between Iran and EU countries.
An increasing number of Iranian businesses, both semi-private and private ones, had to start working with Chinese and Russian counterparts. Their European partners halted their business dealings with Iran following UN implemented sanctions. This has weakened those who advocate accommodating EU countries and UN Security Council over its nuclear issues. They had been arguing that Iran’s persistence has cost its economy dearly. However shifting the major business interests to Russia and China has enabled the government to argue that Iranian businesses do not have any common ground with EU any more.
The unfortunate fact is that EU partners in Iran are mainly private sector, while Iranian firms in the new business ventures are either publicly owned or are related to the public institutions. One wonders if sanctions are hurting Iranian private sector most, the only group that actually have incentives to encourage moderation.
This development increases the cooperation between Iran and Russia in the energy sector, a field where Russia is seeking to play a more prominent role. It also reduces the mutual interests between Iran and EU. This adds to incessant decline in the volume of trade between Iran and EU countries.
An increasing number of Iranian businesses, both semi-private and private ones, had to start working with Chinese and Russian counterparts. Their European partners halted their business dealings with Iran following UN implemented sanctions. This has weakened those who advocate accommodating EU countries and UN Security Council over its nuclear issues. They had been arguing that Iran’s persistence has cost its economy dearly. However shifting the major business interests to Russia and China has enabled the government to argue that Iranian businesses do not have any common ground with EU any more.
The unfortunate fact is that EU partners in Iran are mainly private sector, while Iranian firms in the new business ventures are either publicly owned or are related to the public institutions. One wonders if sanctions are hurting Iranian private sector most, the only group that actually have incentives to encourage moderation.
Tuesday, June 24, 2008
I Announce You Husband and Wife!
According to Islamic law a man and a woman can say their vows themselves and be married, as simple as that, however like everywhere else marriage is no simple affair in Iran. Usually a clergy or a licensed person or sometimes a well-established judge performs the ceremony and then the marriage is registered in the official registry. In the past centuries performing marriage ceremony has been one of the sources of income for the clergies, although it never has been their monopoly.
Still in this ceremony the authority is not that of the office, but it rests with the couple. Those who perform the ceremony ask for the power of attorney first to perform the ceremony and they say their religious vows on behalf of the couple. (This is the part that a bride should wait three times to say; “yes”)
It has been a long and ancient custom to have this ceremony performed by an individual of high standing in the society and good reputation. Thus many grand ayatollahs, Sufis, men famous for their honesty or virtues are usually asked to perform this ceremony. Former President Khatami is no exception in this matter. The photo, taken from webneveshteha.com, shows him after performing the ceremony for Amir Mehdi Jouleh a screenplay writer.
What is interesting about this photo? Well in a society where wearing a tie is officially discouraged how often you see a former president with a groom who is wearing a pink tie!
Wednesday, June 18, 2008
The End of Socialism in Economic Policy Making
The new speaker of Majlis, Dr. Larijani, told reporters that the era of socialist economic policies is over. He emphasized the producing wealth must be encouraged since it guarantees a continuous growth.
He vowed that Majlis would not allow any law contradictory to the new interpretation of Article 44 of Iranian constitution, which allows for extensive privatization, to be passed. He also promised that new interpretation will become law very soon. This legitimizes privatizing several public enterprises and ends the government’s monopolies in several others. It seems that the economy is presumed to be the main task as hand.
On the other hand the government accepted that any further reduction of interest rate is not advisable, a victory for the head of Central Bank. While banks continue to implement a %12 interest rate, it is decided that the government pays %2 in subsidies to the industry to reduce their expenses.
Although it seems the tide is turning and after a few years of populist projects, high inflation has wised up some to their true cost. However President Ahmadinejad is still determined to go ahead with his great surgery of the economy. One only can hope, that rationalism prevails yet another time.
The era of socialism might be over, unfortunately its influence on Iranian intellegtsia and some politicians is not.
He vowed that Majlis would not allow any law contradictory to the new interpretation of Article 44 of Iranian constitution, which allows for extensive privatization, to be passed. He also promised that new interpretation will become law very soon. This legitimizes privatizing several public enterprises and ends the government’s monopolies in several others. It seems that the economy is presumed to be the main task as hand.
On the other hand the government accepted that any further reduction of interest rate is not advisable, a victory for the head of Central Bank. While banks continue to implement a %12 interest rate, it is decided that the government pays %2 in subsidies to the industry to reduce their expenses.
Although it seems the tide is turning and after a few years of populist projects, high inflation has wised up some to their true cost. However President Ahmadinejad is still determined to go ahead with his great surgery of the economy. One only can hope, that rationalism prevails yet another time.
The era of socialism might be over, unfortunately its influence on Iranian intellegtsia and some politicians is not.
Saturday, June 14, 2008
Soccer, Development and Decision Making in Iran
To contradict those who argue there is one single will in Iran one only needs to follow the news of soccer in this land of footballers. It is the most popular sport in Iran with fans from all ranks of society, all walks of life and both genders, with female fans still banned from attending the games in the stadiums and yet they go disguised as boys or behind the fences to see their favorite teams play. Its popularity is so widespread that even President goes to national team’s exercises and all of its affairs are followed very closely by most enthusiastic of fans. And may be it is because of that, its confederation IRIFF, the players and the coaches have gained a certain space of maneuverability.
While the world of soccer is watching Euro Cup 2008 Iran’s national team is going through qualification for the World Cup. After much debate Ali Daee, former team captain and Asia's best player in 2000, has become team's manager and coach. The other potential candidate Afshin Qotbi was put aside, although he led his team, Persepolis, to become the champion of Iranian league. Like any other coach Ali Daee prefers some players to the others. It is not a secret that he does not like Ali Karimi, Asia’s Best Player in 2004 and one of Iran’s most celebrated footballer.
Karimi was banned from playing in the national team after he made numerous criticisms towards the IRIFF. And obviously Ali Daee did not feel obliged to include him in the team. Figures such as Iranian President Mahmoud Ahmadinejad and Hassan Khomeini, the grandson of the founder of Islamic Republic intervened to have him reinstated. Although IRIFF officially has pardoned him, the coach of national team does not feel obliged to field him yet. Something odd in a country where people are supposed at least to seem that they follow the official lead.
It is interesting to notice that soccer is the first place where President Ahmadinejad found his opponents to be too formidable. Last year after a long and politically charged debate as to who should lead IRIFF he had to ask Mr. AliAbadi the chairman of Iran’s Sports Organization to step down as a candidate. FIFA had threatened to boycott Iranian teams from international competition if the government would not have withdrawn its candidate from the election for the IRIFF chairmanship, which is considered an NGO. The prospect of having Iranian teams banned from international fields proved to be too terrifying even for the current cabinet.
Looking at this example one is obliged to think that may be popular support and interest is what plans to achieve sustainable economic development lack in order to succeed in Iran.
Where soccer teams succeed to divert policies that hurt their chances to attend international competitions, Iran’s industrialists and economists fail to convince politicians of the benefits of globalization and free competition. Where national team coach exercises a free hand in choosing his players and is chosen by an NGO, Iran’s manufacturing sector is mainly run by the government appointees and its private sector has to yield to the government’s influence and interfrence from time to time. The contrast could not have been greater. May be after all what development lacks in Iran is some soccer fans!
While the world of soccer is watching Euro Cup 2008 Iran’s national team is going through qualification for the World Cup. After much debate Ali Daee, former team captain and Asia's best player in 2000, has become team's manager and coach. The other potential candidate Afshin Qotbi was put aside, although he led his team, Persepolis, to become the champion of Iranian league. Like any other coach Ali Daee prefers some players to the others. It is not a secret that he does not like Ali Karimi, Asia’s Best Player in 2004 and one of Iran’s most celebrated footballer.
Karimi was banned from playing in the national team after he made numerous criticisms towards the IRIFF. And obviously Ali Daee did not feel obliged to include him in the team. Figures such as Iranian President Mahmoud Ahmadinejad and Hassan Khomeini, the grandson of the founder of Islamic Republic intervened to have him reinstated. Although IRIFF officially has pardoned him, the coach of national team does not feel obliged to field him yet. Something odd in a country where people are supposed at least to seem that they follow the official lead.
It is interesting to notice that soccer is the first place where President Ahmadinejad found his opponents to be too formidable. Last year after a long and politically charged debate as to who should lead IRIFF he had to ask Mr. AliAbadi the chairman of Iran’s Sports Organization to step down as a candidate. FIFA had threatened to boycott Iranian teams from international competition if the government would not have withdrawn its candidate from the election for the IRIFF chairmanship, which is considered an NGO. The prospect of having Iranian teams banned from international fields proved to be too terrifying even for the current cabinet.
Looking at this example one is obliged to think that may be popular support and interest is what plans to achieve sustainable economic development lack in order to succeed in Iran.
Where soccer teams succeed to divert policies that hurt their chances to attend international competitions, Iran’s industrialists and economists fail to convince politicians of the benefits of globalization and free competition. Where national team coach exercises a free hand in choosing his players and is chosen by an NGO, Iran’s manufacturing sector is mainly run by the government appointees and its private sector has to yield to the government’s influence and interfrence from time to time. The contrast could not have been greater. May be after all what development lacks in Iran is some soccer fans!
Wednesday, April 30, 2008
So It Rumbles
The problem these days with writing on Iranian economy is the number of subjects to write and not the lack of a topic of interest. The most noticeable event was the change of the guard in the ministry of Economic Affairs. Dr. Danesh Jafari, whose immediate departure had been a topic of rumors in capital, left his office not so quietly. In his farewell address he gave an account of internal conflict over the economic policies in Iranian government.
He highlighted the lack of belief in the principle concepts of economics theory, the lack of trust in experienced individuals and the lack of belief in the 4th development plan as the road map of development in Iran. He told his audience: “the government does not consider the 4th development plan as an obliging document and yet it has not introduced a substitution.”
He mentioned the friction between the government and other bodies and organizations. He also criticized those who do not know much about economics and economic affairs and create crisis through misinformation. He offered a history of these events, such as accusing the managers of insurance companies of fraud, accusing an unknown high official of accepting bribes to grant license to import cigars, accusing tax services of being unfair and some other incidents.
He particularly named Dr. Jahromi the minister of Labor as someone who opposed his line of policies by saying: “Whatever we did to persuade this dear friend of ours, Dr. Jahromi, that publishing money does not create jobs, was unsuccessful.” His account was the headlines of Iranian papers the day after and forced the Vice President to deliver a speech to defend the government’s economic policies right there and then.
Dr. Jahromi is already a known name in policy making circles. To many he is the main leader of those who advocate a further reduction of interest rate and oppose the policies advised by the economists in the Central Bank of Iran and Economic Affairs Ministry. He already made that well known by writing an open letter to the President criticizing the monetary package suggested by the Central Bank to control inflation accusing it of hurting production.
In his letter Dr. Jahromi wrote: “In last year private banks by using the agreed upon rate of return charged much higher rates than what government approved.” He recommended: “There must be investment companies to prevent banks from investing directly.” He highlighted the policy regarding banking sector by saying that it is a matter of policy to limit the banks to banking services and to prevent them from investing. His reason for such an approach is Iranian banks “natural” desire to invest in service sector where a short term profit is available and their reluctance to invest in long term projects.
Dr. Danesh Jafari departure is assumed a victory for Dr. Jahromi and his supporters in the cabinet. However many experts continue to warn against the government’s economic policies. Many say that adopting such policies would increase an already high inflation even more. In response President Ahmadinegad in a recent speech in Qom accused those with special interests in banks, customs and monopolies to conspire against the government causing the inflation.
The rising housing prices, the global food crisis and the forecasted drought and above all rising inflation that according to the Central Bank continues to rise all draw a challenging picture for Iranian economy. And the critiques of the government have wasted no time in blaming government policies. However at the end of the day the issue is not one of the policy but of believing in economics as a science. As many economists point out readily: “The prevailing opinion is that of engineers and not that of economists in policy making in Iran.”
He highlighted the lack of belief in the principle concepts of economics theory, the lack of trust in experienced individuals and the lack of belief in the 4th development plan as the road map of development in Iran. He told his audience: “the government does not consider the 4th development plan as an obliging document and yet it has not introduced a substitution.”
He mentioned the friction between the government and other bodies and organizations. He also criticized those who do not know much about economics and economic affairs and create crisis through misinformation. He offered a history of these events, such as accusing the managers of insurance companies of fraud, accusing an unknown high official of accepting bribes to grant license to import cigars, accusing tax services of being unfair and some other incidents.
He particularly named Dr. Jahromi the minister of Labor as someone who opposed his line of policies by saying: “Whatever we did to persuade this dear friend of ours, Dr. Jahromi, that publishing money does not create jobs, was unsuccessful.” His account was the headlines of Iranian papers the day after and forced the Vice President to deliver a speech to defend the government’s economic policies right there and then.
Dr. Jahromi is already a known name in policy making circles. To many he is the main leader of those who advocate a further reduction of interest rate and oppose the policies advised by the economists in the Central Bank of Iran and Economic Affairs Ministry. He already made that well known by writing an open letter to the President criticizing the monetary package suggested by the Central Bank to control inflation accusing it of hurting production.
In his letter Dr. Jahromi wrote: “In last year private banks by using the agreed upon rate of return charged much higher rates than what government approved.” He recommended: “There must be investment companies to prevent banks from investing directly.” He highlighted the policy regarding banking sector by saying that it is a matter of policy to limit the banks to banking services and to prevent them from investing. His reason for such an approach is Iranian banks “natural” desire to invest in service sector where a short term profit is available and their reluctance to invest in long term projects.
Dr. Danesh Jafari departure is assumed a victory for Dr. Jahromi and his supporters in the cabinet. However many experts continue to warn against the government’s economic policies. Many say that adopting such policies would increase an already high inflation even more. In response President Ahmadinegad in a recent speech in Qom accused those with special interests in banks, customs and monopolies to conspire against the government causing the inflation.
The rising housing prices, the global food crisis and the forecasted drought and above all rising inflation that according to the Central Bank continues to rise all draw a challenging picture for Iranian economy. And the critiques of the government have wasted no time in blaming government policies. However at the end of the day the issue is not one of the policy but of believing in economics as a science. As many economists point out readily: “The prevailing opinion is that of engineers and not that of economists in policy making in Iran.”
Sunday, April 13, 2008
A Roadside Conversation on Inflation in Iran
Katalaxy blog has a note on its author’s conversation with a cab driver in Tehran that I found very insightful. He wrote:
“I was walking out of Mehrabad Airport in Tehran looking for a lift to Sa’adat Abad[1]. The cab drivers were yelling their fares from 8’000 to 10’000 Thoman[2] , so I passed. Then someone said: Sa’adat Abad 5 Thoman (meaning 5’000 Thoman). It seemed fair and the cheapest. So I stopped and said:
- Two months ago I went this road for 4’000 Thoman, 25% increase in just two months[3]?
He said:
- Two months ago the year was the year of national unity, this year is the year of innovation and invention[4].
He was right, I laughed and got into his car.”
I love this story because it some how outlines how an Iranian consumer adjust his or her attitude toward inflation. Sometimes he or she does it by a smart comment with some reference to political realities or objectives set by authorities.
[1] A neighborhood in northwest of Tehran, mostly recent constructions It was developed rapidly in 1980’s and 1990’s.
[2] One Thoman is 10 Rials, although Rial is official currency people always use Thoman in their dealings, daily shopping and business activities. One Thoman also stands for 1’000 Thoman or 1’000’000 Thoman, depending on where the conversation is happening. (And most recently for 1'000'000 Thoman, this notion is used in real estate market).
[3] Reader surely observes that the increase in fare is as high as 100% for some other cab drivers.
[4] Iranian new year begins with the first day of spring. In New Year day in their official greetings the officials usually call people to concentrate their efforts in achieving a moral objective, last year this objective was Islamic national unity. This year's objective is achieving technological advancement through innovations.
“I was walking out of Mehrabad Airport in Tehran looking for a lift to Sa’adat Abad[1]. The cab drivers were yelling their fares from 8’000 to 10’000 Thoman[2] , so I passed. Then someone said: Sa’adat Abad 5 Thoman (meaning 5’000 Thoman). It seemed fair and the cheapest. So I stopped and said:
- Two months ago I went this road for 4’000 Thoman, 25% increase in just two months[3]?
He said:
- Two months ago the year was the year of national unity, this year is the year of innovation and invention[4].
He was right, I laughed and got into his car.”
I love this story because it some how outlines how an Iranian consumer adjust his or her attitude toward inflation. Sometimes he or she does it by a smart comment with some reference to political realities or objectives set by authorities.
[1] A neighborhood in northwest of Tehran, mostly recent constructions It was developed rapidly in 1980’s and 1990’s.
[2] One Thoman is 10 Rials, although Rial is official currency people always use Thoman in their dealings, daily shopping and business activities. One Thoman also stands for 1’000 Thoman or 1’000’000 Thoman, depending on where the conversation is happening. (And most recently for 1'000'000 Thoman, this notion is used in real estate market).
[3] Reader surely observes that the increase in fare is as high as 100% for some other cab drivers.
[4] Iranian new year begins with the first day of spring. In New Year day in their official greetings the officials usually call people to concentrate their efforts in achieving a moral objective, last year this objective was Islamic national unity. This year's objective is achieving technological advancement through innovations.
Tuesday, February 12, 2008
Iran Parliament and Women in Higher Education
Iran’s Parliament (Majlis) Research Center recently has completed a study of women in Iran's higher education. According to this report currently Iranian women constitute 65% of student population in Iran’s higher education. This is a two fold increase compared to 32% in 1983, the base year in the study. Iranian female high school graduates share of participants in the nationwide universities’ entrance exam also has increased to 65% from 42% in 1983.
This also means male students form about 35% of Iran’s higher education, and their share of participants in nationwide universities’ entrance exam has fallen from 68% to 35%, less than half of this rate in 1983. These observations indeed signal a significant shift in Iran’s higher education structure and high school graduates willingness to pursue a college degree. So many hypotheses come to mind that can furnish a lifetime of scholarship.
First it seems Iranian men are no longer eager to receive a college degree. This is an enormous shift in society’s cultural beliefs. In a society where diplomas used to say so much about one’s qualities, Iranian men decision to forfeit a college degree could be the first sign that today many consider and evaluate the opportunity cost of higher education first and foremost. Given the high unemployment rate and particularly the high unemployment rate among college graduates, this seems a rational decision. Going to college does not appeal to an Iranian man, if it does not guarantee a job.
Second it seems Iranian women demand for higher education has been increasing steadily. This phenomenon offers a paradox. If men finds it more expensive to pursue higher education how come women demand it even more. There are a number of answers that come to mind and each demands investigation. These hypotheses range from: finding a better match as a husband to finding better jobs or gaining freedom or achieving social prestige and respect. Many suggest these as answers without offering any economic model or hypothesis testing.
One also might suggest declining fertility rate, increasing marriage average age and increasing divorce rate as contributing factors. To this one must add the existing volatility in many households across country that requires husbands and wives to seek employment. Still there has been no model quantifying these factors’ contribution to this phenomenon.
Reading Salehi-Isfahani’s recent writings on education system in Iran some intriguing ideas would come to mind. Among them the question of skill development in an economy where higher education is somehow disconnected from economy and there is no market signaling needs and market demand does not affect resource allocation in higher education sector.
Since many believe that higher education in Iran is not focused on skill development, then recent observations could also mean that Iranian men have found some other venues to develop their skills and they might be paying to receive necessary education somewhere else. For example no one knows what the gender mix is in Microsoft Certificate programs in Iran, usually held by private institutes that are not considered part of higher education and can charge students hefty tuitions by the promise of higher employability.
The other obvious question is that if the increase in women enrollment means women will develop more skills than men and would be able to be more productive. Given the high unemployment rate of college graduates the answer does not seem to be positive. Then why women are more eager to pursue a college degree?
Unfortunately it seems the report is silent about these. Instead it focuses on a longtime concern of traditional social groups and conservatives in Iran. It asks if these developments would alter the balance between Iranian women and men! It also questions the productivity of the budget allocated to higher education because of these changes. It recommends a gender based admission policy in schools with 30% to 40% of the capacity allocated to male students, 30% to 40% to female students and the rest to be decided competitively.
This also means male students form about 35% of Iran’s higher education, and their share of participants in nationwide universities’ entrance exam has fallen from 68% to 35%, less than half of this rate in 1983. These observations indeed signal a significant shift in Iran’s higher education structure and high school graduates willingness to pursue a college degree. So many hypotheses come to mind that can furnish a lifetime of scholarship.
First it seems Iranian men are no longer eager to receive a college degree. This is an enormous shift in society’s cultural beliefs. In a society where diplomas used to say so much about one’s qualities, Iranian men decision to forfeit a college degree could be the first sign that today many consider and evaluate the opportunity cost of higher education first and foremost. Given the high unemployment rate and particularly the high unemployment rate among college graduates, this seems a rational decision. Going to college does not appeal to an Iranian man, if it does not guarantee a job.
Second it seems Iranian women demand for higher education has been increasing steadily. This phenomenon offers a paradox. If men finds it more expensive to pursue higher education how come women demand it even more. There are a number of answers that come to mind and each demands investigation. These hypotheses range from: finding a better match as a husband to finding better jobs or gaining freedom or achieving social prestige and respect. Many suggest these as answers without offering any economic model or hypothesis testing.
One also might suggest declining fertility rate, increasing marriage average age and increasing divorce rate as contributing factors. To this one must add the existing volatility in many households across country that requires husbands and wives to seek employment. Still there has been no model quantifying these factors’ contribution to this phenomenon.
Reading Salehi-Isfahani’s recent writings on education system in Iran some intriguing ideas would come to mind. Among them the question of skill development in an economy where higher education is somehow disconnected from economy and there is no market signaling needs and market demand does not affect resource allocation in higher education sector.
Since many believe that higher education in Iran is not focused on skill development, then recent observations could also mean that Iranian men have found some other venues to develop their skills and they might be paying to receive necessary education somewhere else. For example no one knows what the gender mix is in Microsoft Certificate programs in Iran, usually held by private institutes that are not considered part of higher education and can charge students hefty tuitions by the promise of higher employability.
The other obvious question is that if the increase in women enrollment means women will develop more skills than men and would be able to be more productive. Given the high unemployment rate of college graduates the answer does not seem to be positive. Then why women are more eager to pursue a college degree?
Unfortunately it seems the report is silent about these. Instead it focuses on a longtime concern of traditional social groups and conservatives in Iran. It asks if these developments would alter the balance between Iranian women and men! It also questions the productivity of the budget allocated to higher education because of these changes. It recommends a gender based admission policy in schools with 30% to 40% of the capacity allocated to male students, 30% to 40% to female students and the rest to be decided competitively.
Thursday, January 31, 2008
Conference on Iran’s Economy at University of Illinois
Department of Economics and the Center for South Asian and Middle Eastern Studies (CSAMES) at the University of Illinois at Urbana-Champaign (UIUC) have initiated a call for papers on Iran’s Economy. This conference is going to be held at Urbana-Champaign this coming December. Program is chaired by Hadi Salehi Esfahani, University of Illinois at Urbana-Champaign and M. Hashem Pesaran, Cambridge University. Among its members there are: Djavad Salehi-Isfahani, Virginia Tech and
Mohammad Tabibian, former deputy of Management and Planning Organization. For more information please visit: http://www.iranconference.org/
Spread the word this is going to be a great gathering of the economists who work on Iran’s issue.
Mohammad Tabibian, former deputy of Management and Planning Organization. For more information please visit: http://www.iranconference.org/
Spread the word this is going to be a great gathering of the economists who work on Iran’s issue.
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