Iran Economy NewsTehran’s Monopoly and Economic Instability

Tehran’s Monopoly and Economic Instability

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Since the ayatollahs and their brokers captured Iran’s economy, they only provided economic facilities and opportunities only for their loyalists in field of commercial, industry, and production areas, and the private section and non-affiliated sectors of the economy with this government, were deprived of their activities and implementation of their plans.

The private sector has to run for months in the maze of administrative bureaucracy to receive its licenses, while one of the indicators of free competition in any country is the lack of monopoly in decision-making for economic activity.

In Iran’s political economy, unilateral domination of economic activity has not only not decreased but government oversight bodies have always been one of the main obstacles in this regard.

Also, setting regulatory rates for foreign currencies and setting prices for goods and commodities make it very difficult for non-governmental producers to carry out their activities.

Ordering prices, on the one hand, and informal market prices, on the other, have caused government officials to always take advantage of this rent-seeking scheme in various areas of economic activity.

Mess in Iran’s Government

The monopolistic policy of managing the economy of a country of 80 million people not only frustrates the domestic producers and professionals but has also drawn attention from international institutions. The Fraser think tank reported a 15-degree drop in economic freedom in Iran, ranking Iran 158 out of 162 countries.

“In its latest report, the Fraser Research Institute examines the decline in economic freedom in 162 countries during 2018. This report, which is based on the statistics of 2018 (1397 Persian calendar year), gives Iran a score of 4.8 in terms of economic freedom and ranks the country 158, in the red zone,” Eghtesad News daily wrote on November 22.

Government-linked economists acknowledge that the cause of the economic turmoil is the existence of institutions that have exclusive monopoly decisions. “In political economy, the interests of some golden signatures and monopolies hinder economic growth and business prosperity in the country,” Tasnim news agency wrote on November 25.

Other known disadvantages of the Iranian government’s monopoly in the economic field are concern, fear, and ultimately the flight of investors in the field of scientific and sustainable industrial production.

In 2018, parallel to international sanctions and the fall in oil prices, the government of Hassan Rouhani set a price order for currency and other goods and services.

The move caused concern and fear among investors and private sector activists, who failed to calculate the import of raw materials, machinery, and parts needed for production, and production costs began to rise suddenly.

The volume of economic instability anywhere in the world reduces the motivation of the private sector and investment activities.

In such an environment where the exchange rate and inflation are rising day by day, investing was no longer reasonable and with a secure future.

When the price of the U.S. dollar increases from 40,000 to 200,000 rials and it does not have the necessary stability, there is no hope of investing.

“Therefore, if a production unit wants to invest in any sector of the economy, it faces a series of instabilities in which exchange rate fluctuations and the obligation to set a price lower than the real price are at the top,” Jahan-e-Sanat daily wrote on November 25.

“All this has led to negative investment growth and its reduction to less than the annual forecast, and at the same time investors have turned to deposit in banks; An issue that could be a wake-up call for future economic and investment activities,” the daily added.

Investors who have invested in the Iranian government’s monopoly soon realized that they made a mistake. In their media, they spoke about the freezing of the economic atmosphere and the impossibility of continuing their work.

“The bitter reality is that in the 2000s, the flow of investment in the Iranian economy in all three places [private-government-foreign] has been freezing and it will not be long before the material and physical capital invested in recent decades due to lack of modernization and lack of replacement and increase in depreciation, are being destroyed,” Jahan-e-Sanat wrote on November 26.

Now, the general public interested in the growth and development of Iranian society is saying with one voice that the only obstacle to the growth and development of Iran is the removal of the monopoly barrier of the government officials that governs the fate of the people.

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