A change of paradigm

Ali Arshadi

A few days have passed since the 24th conference of Monetary and Foreign Exchange Policies was held in Tehran. As usual, banking authorities and experts expressed their views and comments on the issues. Most of discussions included highly relevant and very important points which deserve due attention. The main achievements of the conference for the country and the nation are subject to a question to be cautiously answered.
A combination of the issues discussed in the conference, including the main roots of recession and challenges facing the banking system, it can be understood that despite numerous five-year development plans, many upstream documents, and substantial oil revenues in the last years, the country suffered from lack of a proper roadmap. It has been struggling with the most primitive economic challenges without presenting a promising perspective to resolve them. The country relies solely on its banking resources to tackle economic problems.
Hence, it is no surprise that the challenges gain momentum and occupy broader territories. It seems that Iran has two ways. Either to rely on the old beaurocratic paradigm which contains no particular prescription for future challenges and, in its optimal destination, intends to arrive at an inflation rate of 15% and an economic growth rate of 5%. Or to turn to a second paradigm which with more than a 5% growth rate in mind, is comprehensive and complies with modern-world standards. It characterizes itself by paving the way for development of the country based on two significant growth factors of technology and productivity. A review of economic history reveals that these two factors require a competitive environment. Therefore, policy-making needs to focus on this very principle. Other areas such as social and political domains also require their own paradigm as compliant with this model. A comparison of economic indices in competition-based countries with those of countries based on centralized planning signifies the importance of this paradigm. It is interesting to note that most remedies prescribed for today's challenges resemble the outdated ones which were implemented, and failed, in the countries with centralized plans in the second half of the 20th century. A consensus on national policy making is recommended to be arrived at and designed in the form of a national document so that it would not be affected by political turbulences. In this way, most of current micro and macro challenges from number of banks and pricing vehicles to the size of government can be efficiently dealt with according to market conditions.