Factors influencing the realization of sustainable economic growth

An economist believes that economic growth should be evaluated in the light of all macroeconomic indicators and goals, and only then can economic growth be sustainable and verifiable.

In an interview with IBNA, Ali Akbar Nikooqbal stated: “Iran’s economy has been facing negative economic growth for several years, and at the same time we have witnessed exchange rate changes that were in favor of exports and destroyed the economic justification of imports, and as a result, perhaps with such Developments made it possible to create positive economic growth. But economic growth can only be considered sustainable and valuable in the light of fundamental changes in economic development.

He stressed: “This type of assessment of the economic version, even if it is faced with the lifting of sanctions and increase in revenue from oil exports, still does not solve the current problem of Iran’s economy because increasing oil revenues along with lower exchange rates to 11 USD.” (Dollar exchange rate in the 1400 budget) leads to short-term prosperity and economic growth and moves towards the Dutch disease, which will result in deindustrialization and strong dependence on foreign exchange earnings from oil and gas exports.

Nikoo Eqbal continued: “But if we design the economy in such a way that the basic goals of macroeconomics, namely economic stability and price stability, are achieved, and in simpler words, we will bring the current annual inflation to 5% in two or three years; In this case, over time, economic growth will be created spontaneously by the growth of domestic and foreign investment and the increase of national and global trust in such a dynamic economy. Therefore, only such an economic growth can be defended and approved, even if the growth rate is small, because it has the ability to survive and be sustainable and simultaneously with the realization of other goals of the national economy.

According to this economist, economic growth of, for example, a positive two percent with inflation of 40 percent and an unemployment rate of more than 12 percent, can not be happy because with two percent economic growth, what problem and economic disaster such as inflation can be solved? It is natural that economic growth, even 10% in an unstable manner, cannot be responsible for 40% inflation. Naturally, no sane person would approve of such a trend in economics. We need to know that if there are estimates of positive economic growth next year, it does not mean that all economic indicators will improve.

Emphasizing that two-thirds of Iran’s economy is owned or supervised by the government and government institutions, he continued: “We have a state-owned economy; Therefore, the source of our economic health is the government and government economic policies. The budget is an objective example of this, because if it is balanced and has no deficit, we will definitely have the best economy, but unfortunately we do not see such a thing in the 1400 budget because our budget is not economic.

According to this economist, the budget should not be a place to influence and impose the demands of institutions. I do not think there is a waste of resources in Iran in any country.
In another part of his speech, the economist said: “The world economy has faced a strange and exceptional phenomenon called stagflation for more than half a century, which according to new theories, these two disasters cannot be solved with money and finances.” . In fact, the neoclassicists or the moneylenders came to the conclusion that if we were to go to extremes and increase spending, inflation would naturally increase. As a result, we are not allowed to overspend, and if, on the contrary, we reduce spending, we will face further recession.

Nikooqbal added: “So the traditional solutions of the past can not solve the problem.” The solution they showed is very simple and understandable; To reduce inflation, it is necessary to reduce government spending and increase liquidity. Thus, the government reduces its spending by reducing taxes on producers in order to increase producers’ profits and increase their willingness to invest. Reducing government spending, on the other hand, reduces inflation. Therefore, increasing corporate profitability increases their willingness to invest and produce more, that is, getting out of the recession. On the other hand, reducing government spending will reduce aggregate demand. The presence of aggregate demand is greater than aggregate supply, so inflation is reduced.

He stressed: “It is clear that one of the important variables of economic growth is to increase the efficiency and productivity of the whole economy, which can increase and contribute to economic growth without inflation with management policies and various administrative measures of the government.” Interestingly, with the aforementioned policies, global inflation growth in the last decade is below 5% and unemployment due to the recession is in the range of 4%; Therefore, the stagflation in the Iranian economy can also achieve the desired result with the aforementioned policies.

The economist believes that creating the right conditions for good governance, getting rid of the state economy and real privatization, fighting corruption and bureaucracy, improving the business environment at home and finally improving international relations can all play an effective and useful role in achieving this. Have macroeconomic goals, including sustainable economic growth in Iran.