1 Assessment of the Economy of Iran and Statistical Analysis of the most important Indicators especially during the Past Three Decades with special focus on Foreign Trade along with short- term Forecast of some Economic Indexes Vorgelegt von Diplom-Kaufmann Naser Hekmat Von der Fakultät IV – Elektrotechnik und Informatik der Technischen Universität Berlin zur Erlangung des akademischen Grades Doktor der Wirtschaftswissenschaften -Dr.rer.oec- genehmigte Dissertation Promotionsausschuss: Vorsitzender: Prof. Dr. Krallmann Berichter: Prof. Dr. Friedrich Berichter: Prof. Dr. Weißhuhn Tag der wissenschaftlichen Aussprache: 21.10.2005 Berlin 2005 D 83 2 m 3 INDEX 1. Foreword 7 2. A Look at the History of Iranian Economy 8 2.1 The First Civilization in the Iranian Plateau and the Formation of Elam State 9 2.2 The Second Period of Iranian Civilization and the Invasions of Lands by the Iranian Dynasties 17 2.3 The Third Phase of Iranian Civilization and New Changes in the Social Structures 32 2.4 The Fourth Phase of Iranian Civilization under the shadow of International Changes 52 3. The Economic Renovation Phases of Contemporary Iran 74 3.1 The First Phase of Economic Reconstruction in Iran 75 3.1.1 Some Specifications of the First Reconstruction Phase 76 3.1.2 A Look at Some Statistical Data in 19th Century 78 3.1.3 The First Efforts for Democratization of Government Structure 86 3.1.4 Some of the Statistical Data of the Early 20th Century 88 3.2 The Beginning of the Second Phase of Economic Reconstruction in Iran 96 3.2.1 Specifications of the Iran's Economy during the Second Phase of Reconstruction 97 4 3.2.2 Statistical Diagrams in the First Phase of Economic Modernization 108 3.2.3 The End of the Second Modernization Phase and the Disorder following the Second World War 114 3.2.4 The Second Endeavor fro Democratization of Social Structure 115 3.2.5 The Increasing Role of Oil in Economy of Iran and some Diagrams 120 3.2.6 Agrarian Reforms and the Reactions 128 3.3 The Third Modernization Phase of Iranian Economy 132 3.1.1 The Determining Role of Oil in Economic Growth 133 3.1.2 Specifications of Economic Growth in the Third Phase 136 3.1.3 The Third Initiative for Founding Democratic Structures 140 3.1.4 Iran- Iraq War and its Economic Consequences 142 4. Study of Statistical Data with a special view to Foreign Trade 148 4.1 The Iranian Geography and Nature and its effect on Economic Changes 148 4.2 Demographic Changes and Considerable Population Increase 156 4.3 Work and Human Resources under Capitalistic Growth 171 4.4 Financial Indexes, Revenues and Costs, Inflation, Investments and Perspectives 183 4.5 Change in the Industry, Agriculture and Servicing Sectors and the Effects thereof on the Domestic Gross Production and National Income 199 4.5.1 Industry and Mines and its Growth Specifications 202 4.5.2 Changes in Agriculture Sector 215 4.5.3 The Service Sector and its Accelerating Growth 224 5 4.6 The Effects of Economic and Social Changes on the Social Services, Health, Education and Culture 230 5. Foreign Trade and its Importance in the Economy of Iran 241 5.1 A Look at the History of Foreign Trade in Iran 242 5.2 Iran's Exports without Oil and its Difficulties 246 5.3 Increasing Imports and Changes in the Iranian Market 258 5.4 Foreign Trade Balance, Difficulties and Perspectives 268 5.5 Foreign Trade and Economic Plans 277 5.6 The Special Role of Oil and Gas in Foreign Business and in Economy of Iran 282 5.7 Some International Comparisons in regard to Foreign Trade and other Economic Indexes 305 6. Three Scenarios for Predicting Changes in Foreign Trade and Economy of Iran 232 6.1 Statistical Theories for Economic Forecasts 327 6.2 Scenario of "Economic Liberalism with Mullahs" 329 6.3 Scenario of "Economic Liberalism without Mullahs" 333 6.4 Scenario of Tension 337 7. Guidelines for Foreign Investors, Exporters and Importers 342 8. Facilities for Economic Improvement in Iran and some Conclusions 347 9. References of the Thesis 354 10. Autor or Aritcle(A-Z) 372 11. Statistical Sources of Diagrams and Tabels 380 12. Diagrams and Tabels 381 6 7 1. Foreword The present thesis which studies the current economy of Iran with a special emphasis on extraterritorial trade has some characteristics. First of all, the need to analyze the causes of thee economic and social interactions in present Iranian society compelled the writer to have a look at the historical roots of the changes. No comprehensive book on the history of Iran's economy is available and the works so far written by writers and researchers mainly study the political, social and cultural events. The first part of this thesis which includes a summarized analysis of the history of Iranian economy, as far as the writer knows, is the first work in this area. Valuable researches have been done about the specifications of the Iranian economy in certain historical junctures by Iranian and foreign researchers and the writer has made use of some of them in the present study, but the Iranian economy as a whole and as a correlated system has not been analyzed and evaluated before. The second specification of the present research is the historical study of the Iranian economy until contemporary era with a special look at foreign trade within the framework of four historical periods. The selection of these four periods – as most writers divide the history of Iran into two pre-Islamic and post-Islamic periods- which is done for the first time can help clarify the economic and social changes better. The other advantage of this study goes back to the study of economic changes of Iran in the fourth and last phase during which the efforts to reconstruct and modernize economy are divided into three courses of modernizing structures before the Mullahs and one course of "efforts toward modernization" after the Mullahs came to power. The major part of the work is devoted to statistical study of economic changes during the Islamic Republic and offers comparisons with the Shah's time. The fourth characteristic of this study is the use of near 220 diagrams for better clarification of economic changes during the past century especially during the years of the Islamic regime. In these diagrams, the Qajar and Pahlevid periods have been statistically studied in brief and the Velayat-e-Faqih Regime in details. The fifth characteristic of this thesis is a statistical forecast for the most important economic indexes based on three scenarios for the short-term changes in the future of Iran. These three 8 scenarios include "economic liberalism with Mullahs", "economic liberalism without Mullahs" and the scenario of "tension". 2. A Look at the History of Iranian Economy Iran is a country with an ancient history. The Ancient Greek used to call the inhabitants of this land Mede or Pars.(1) The reason can be attributed to the fact that the first kingdom dynasty of the western parts of the Country was established by the Medes and the founders of the two great empires, Achaemenides and Sassanids, Cyrus and Ardashir Babakan (Artakhshartra) belonged to the Pars Arians in the South and Center of this land.(2) Before the new official nomenclature, this historic land was known as Persia among the foreigners and even today, the name Persia to the Europeans is a reminder of Ancient Iran. "Aria" is a name by which both the East Iranians and the West Iranians of Media and Pars and also the Indians of "Veda" age and some of their fellow racial groups including Mitanis liked to call themselves and indicated a sense of superiority that tempted them toward egotism caused by their physical strength and beauty in contrast with their aboriginal neighbors and foreigners.(3) The development trend of the production method of the inhabitants of Iran dates back before the foundation of the first Median dynasty. Based on the archeological researches carried out so far, the mountaineers of Northwestern Iran were amongst the first human beings who started farming and animal husbandry in this land. Farming and animal husbandry followed tens of thousands of years hunting and food gathering life the evidences of which have been found in the caves and in the vicinity of rivers and springs. The step by step and long-term achievements of the Paleolithic ages and the climatic transformation following the freezing age changed the production method and ended the hunting age. The last age of Paleolithic- the Meta-Paleolithic age- in Iran ended about 7,000 years ago.(4) The first human habitat belonging to about 10,000 years ago has been found in the northwest of Iran in the form of tents and mud houses. In these shelters, the first agricultural tools including mill and also storage for grains and simple ceramics can be found.(5) Based on an archeological survey, the Neolithic age which has started after the Meta-Paleolithic age in the Iranian Plateau and has resulted in full 9 settlement in rural areas and then to urbanization, can be divided into three stages. The first stage is the stage of food gathering with a remarkable change in tool making techniques, the second stage is the stage of gathering and storing food and the third stage is the stage of production and rural settlement. The traces of these three Neolithic phases can be found in different parts of Iran including "Ali Tapeh", "Kamarband" and "Ganjdareh" hills in Harsin and "Tapeh Sarab" near Kermanshah.(6) The farming and animal husbandry gradually covered the east and west parts of Iran to the Persian Gulf until 6000 years B.C.