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| Volume XII, Fall 2005, Number 3 |
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ABSTRACT
Iran’s Third Development Plan: An Appraisal |
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| Jahangir Amuzegar |
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Dr. Amuzegar was finance minister and economic ambassador in Iran’s pre-1979 government.
Iran's Third Five-year Economic Development Plan finished its course in March 2005 with mixed results. While it approached or achieved some of its tactical targets (e.g., annual GDP growth and investment), it fell behind most of its strategic goals (e.g., reduced dependence on oil income, downsizing the government, privatization of state enterprises, increase in productivity). This third attempt since the end of Iran/Iraq war in 1988 has been based on the old, soviet-invented, notion that the Third World's economic salvation is ad hoc to central planning. Although long discredited and abandoned by its inventor and other prominent imitators, the Islamic Republic has faithfully continued the costly and futile exercise. The latest experiment has proved once again that (1) central planning-- instead of offering an effective solution to Iran's deep-rooted economic problems-- is itself part of the problem; and (2) the Plan's outcome, far from being the fruits of the planners wits and wisdom, owes its successes and setbacks to unforeseen events and factors unbeknownst to them. The palpable achievements have been chiefly the result of the unprecedented oil boom in the country's 97-year oil history as well as some provident rainfalls. The failure to effectively reduce the economy's misery index of double digit inflation and unemployment has been rooted in the Plan's lofty and contradictory objectives, lack of discipline on the part of state agencies in charge of implementation, and the irresistible influence of powerful vested interests.
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