The Forum for Partners in Iran's Marketplace
 
 
 
 
 
 
 
 
 
 
 
     

September 2003 / No. 25


On Agenda

Exports
a Fourth Plan Priority

To attain more economic clout in the world markets, every country must seek to remove problems and domestic bottlenecks, determine suitable economic strategies for growth and change economic, social, political and cultural structures.

Global developments during the past two decades have proven that the role of every country in international politics is determined by the economic might of that country. The winners will have a bigger share of global trade. Therefore, to attain more economic clout in the world markets, every country must seek to remove problems and domestic bottlenecks, determine suitable economic strategies for growth in production, change economic, social, political and cultural structures for administrative and organizational coordination in line with developmental strategies and, finally, get the society to the limits of welfare by taking full advantage of production capabilities and increasing volume of exports.

Under these circumstances, attention to the role of international factors in determining the direction and pace of economic developments of various countries becomes more important than before. So that, the global economic system in view of the influence of each of the international factors, has nearly turned into a unified global system based on division of labor and this has added to complexities of global trade.

The experience of global transactions has proved that excessive reliance on domestic resources to meet domestic needs might succeed in meeting those needs, but would lead to lowered economic welfare.

Closing the doors on imports, would face the country with other limitations including reduced quality of domestic products, lack of technology transfer and blocking the way to new production methods, which would in turn led to the serious downfall in social welfare. Therefore, imports will bring with them a wave of new developments, recognitions and technology that would provide motivations for qualitative and quantitative growth of domestic products.

On the other hand, the need for new investments—which calls for new technologies, machinery and technical equipment—will reveal the corresponding need to a forex source for developing countries. Therefore, these countries export raw materials including oil as well as traditional and agricultural products, which frequently do not exceed one or two products. Reliance on export revenues from the said sources will make forex revenues unstable due to their downward and shaky trend in global trade, which will be ensued with shakiness and instability of developmental plans in such countries. On the other hand, diversification of exports for earning forex revenues and stability for formulating developmental plans and increasing imports would require adoption of a dynamic, long-term policy that is known by the economists as the export development policy. Even import replacement policies need export development as a factor for bolstering forex resources.

Therefore, development of exports and increased capacity of the country’s export revenues can strengthen development planning and transfer of new technologies to increase domestic production capacity and even develop products to replace imports.

On the whole, the following points can be mentioned with regard to positive effects of the export development policy:

1. Export development based on free trade would guarantee higher efficiency and production. Therefore, development will also boost the welfare of consumers through increasing their revenues and choosing opportunities.

2. Development of exports would pave the way for savings in many modern industries, which will in turn slash average expenditure and the cost of products and increase competition at global markets.

3. Expanding trade and developing exports will push the economy towards production and sale of products for which the country enjoys relative advantages or, at least, can produce them at a relatively lower cost, provided there are similar motivations and encouragements for sales.

4. It is believed that the prerequisite of an export development policy is total liberalization of import of raw materials as well as intermediate and capital goods for increasing quality of production. However, precise supervision over exports in order to prevent export of low-quality goods is a must. Therefore, considering the amazing effects that export development can have on the economy, to get rid of the economic problems such as unemployment, inflation and low economic growth rate; the export development policy must be the pivot of the Fourth Economic Development Plan.

Therefore, the planning system of the country must focus on this issue to lay suitable grounds for qualitative enhancement of products and identification of target markets in view of Iran’s geographic situation as well as the availability of rich energy resources and inexpensive labor. This can be accomplished by paying due attention to the advantages of export development for creating jobs, increasing forex resources and boosting economic welfare.

 

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