In which direction is Iran’s economy heading after Hassan Rouhani secured his second term as the president of the Islamic Republic? One of Rouhani’s main goals is reducing Iran’s dependence on oil revenues, diversifying the economy and solve the unemployment problem. However, the president’s plan embraces a risk: it is based on neoliberal policies that foster the private sector in order to boost the domestic growth. But this too rapid growth may impact negatively on social inequalities.
Rouhani has driven the country towards a new era, mainly without the international sanctions against Tehran’s nuclear program, which smothered the economy.
Almost two years after the Iran deal was signed, Rouhani’s main challenge is facing unemployment, which stands at 12.7 percent overall, reaching a peak of 27 percent when it comes to youth and is more than 44 percent among women.
In order to start paving a new road, his number one objective is diversifying the economy. In Rouhani’s words: cutting Iran economy’s “umbilical cord” to oil revenues, which are actually the first source of government income.
Innovation and technology to diversify the economy
During his 2017 presidential campaign to guarantee his «dobare Iran» – «a second time, Iran» – Rouhani promised to create 900, 000 new jobs a year. He also pledged to keep inflation rate low – as he contributed to drop it to 7.5 percent during his first term. Increasing the production should be an anchorage to this objective.
But more than a year after the sanctions relief, that hindered any international trade with Tehran, the road to Iran’s recovery is still long.
Nevertheless, the world of tech and innovation can give a valid response to these needs, especially in a country where a huge amount of the population is young and well-educated. Rouhani is oriented toward this direction and, under his first term, the Islamic Republic showed a friendly attitude towards local hi-tech firms.
Main difficulties and disincentives
This perspective is made bleary by several obstacles. 1) There are structural problems concerning Iran’s economy, such as high dependency of oil revenues (Rouhani promised to intervene on management of oil export revenues, but it is not clear how) and an enormous number of young, educated and skilled Iranians without a job.
2) Although the president’s narrative opens to a “digital revolution” and his program looks to internet infrastructures’ promotion and the expansion of 3G and 4G services, startups are still facing problems, due to web access’ restrictions and internet filters in the country.
3) Although the Iranian Communication Ministry’s budget in 2015 was its largest ever, the overall amount may be subjected to a cut of 16.5 percent this year.
4) Hardliners see the free internet as a threat. On the one hand, the Supreme leader, Ali Khamenei, strongly supports local knowledge-based industry (therefore high-tech companies), as the core of the so-called “resistance economy”. On the other hand, a major free internet penetration with connections to global social media may constitute a temptation against the Islamic republic’s moral values.
This can sound odd, especially in a country where about 60 percent of the population surf the internet, according to numbers released by the Statistical Center of Iran, and most of the people uses VPN to avoid regime’s filtering.
What has changed for the tech galaxy after sanctions relief
After sanctions relief, the Iranian hi-tech industry re-started accessing to advanced technology. Indeed, before that moment, many producers were not able to purchase necessary components. Moreover, Iranian products were not allowed to be exported.
However, particularly under sanctions, as argued here, a positive outcome emerged: Iranians begin to buy domestic products, encouraging local economy.
What has to be changed
As explored also here, diversifying the economy and opening up to innovation also means making a difference: riding the changes and transformations across the society, in terms of legal rights for entrepreneurs, liberties concerning internet censorship and other civil rights.
Iranian startups’ realm, such as Takhfifahn, the local Groupon, or Digikala (the Iranian version of Amazon), ZarinPal (Paypal twin in Iran), or Expedia’s Iranian model Zoraq would certainly benefit from these expected achievements.
On the other hand, labour market may be hurt by all these shifts in terms of precarisation of workers, with short term contracts and rising importance of the private sector.
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