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WEEKLY NEWSLETTER
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Iran
Index
Government incentives to bolster domestic industry were offered
in the mid-1980s, but they were offset by the effects of the war.
Factories were forced to lay off workers or to shut down because of
declines in imports of as much as nearly 50 percent. This decline
resulted in raw material shortages. Other state and private
industrial enterprises converted to production of military
matériel.
In the mid-1980s, Iran halted importation of domestically
producible machinery. As an incentive to domestic production,
industries that produced war matériel were granted about US$400
million to replace items whose import value would have exceeded
US$1.3 billion. Domestic production increases by 1986 resulted in
local manufacture of 80 percent of required munitions, including an
antitank missile and such items as gas masks for protection against
Iraqi chemical weapons. Industrial production held steady in early
1987, following a 20 percent drop in 1985 from 1984. The Ministry
of Heavy Industries anticipated US$75 million in industrial exports
in FY 1986.
Among the projects scheduled for funding in FY 1987 were a
pesticides plant at Qazvin and the completion of a steel plant at
Mobarakeh. There were also plans to construct mineral processing
plants in the northwestern city of Zanjan that would produce 40,000
tons of lead and 60,000 tons of zinc annually.
The non-oil industrial sector represented a small portion of
the economy, but it provided labor-intensive domestic employment,
such as the hand knotting of rugs. Foreign sales of Iran's non-oil
products also generated badly needed hard currency. Iran exported
US$2.3 billion worth of non-oil goods between 1982 and 1987. Of
this total, agricultural products accounted for 32.2 percent,
carpets 29.3 percent, textiles 10.9 percent, and caviar 4.9 percent
(see Non-Oil Exports
, this ch.).
In 1986 Iran started placing greater emphasis on non-oil
sectors to offset falling oil prices and revenue. Non-oil revenue
totaled about US$700 million in 1986, in comparison with oil
revenues of less than US$1 billion. Although it had increased by
US$200 million over the previous year, non-oil revenue fell short
of the official goal of US$1 billion. Carpet sales accounted for
most of the increase, whereas exports of such items as industrial
goods and minerals decreased. The FY 1987 target for non-oil
exports was doubled to US$1.4 billion, including US$50 million in
locally made goods.
Data as of December 1987
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