How Sanctions helped Iranian Tech Industry

By Mahmoud Pargoo, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.

As Iran moves to take advantage of the sanctions relief extended under the Joint Comprehensive Plan of Action, the recent drop in crude prices means that Tehran won’t be able to count on soaring oil revenues in the near future. What’s worse, the declining oil prices will affect the energy-intensive domestic industry, which has benefited from the high crude prices as it has been receiving indirect subsidies in the form of cheap fuel.

In essence, this means that the energy-intensive Iranian industry is about to lose its competitive advantage in the global market. However, things are not all bleak. Iran has an asset that could potentially partially be relied on to tackle the issue of economic growth in the long term: its high-tech sector.

For years, Iran has been investing in industry reliant on intensive research and development (R&D). This policy has been a rare point of consensus in Tehran, which often sees controversy over economic policy driven by political rivalries. Indeed, Supreme Leader Ayatollah Ali Khamenei has called for the advancement of a knowledge-based economy, and in this vein, support for domestic high-tech firms. These companies have been benefiting from special tax exemptions, financial incentives and laws to ban imports of products whose equivalents have been produced domestically, among other measures.

The Islamic Republic’s 20-Year National Vision foresees Iran ascending to the top tier “in the areas of economy, science and technology in the western South Asia region (which includes Central Asia, Kyrgyz regions, the Middle East and neighboring countries).” The trend of increasing Iranian non-oil exports in recent years suggests a trajectory toward the latter objective.

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