Assessment and Analysis of Iran’s long-term Competitive Industrial Performance Gap

The Competitive Industrial Performance Index (CIP) measures a country’s ability to produce, add value, export, and impact global trade through manufacturing industries. To improve industrial competitiveness, focus must be given to expanding production and enhancing its quality with technological advancements. Developing countries need to build technological capacity, increase production, and invest in infrastructure to upgrade their industrial competitiveness. However, Iran’s Competitive Industrial Performance has fallen behind, lacking a favorable position in the region and the world. The annual reports of the UNIDO analyzing data from 1990 to 2020 shows that Iran’s performance has been weak compared to similar economies. The gap between Iran and the global benchmark (Germany with a score of 0.416) and the regional benchmark (Turkey with a score of 0.117) has widened over the past three decades. Additionally, Iran’s manufacturing industry production and export structures have experienced two different directions of transformation in the past two decades. From 2000 to 2010, concurrent with the Third and Fourth Development Plans, the Manufacturing Value Added share in total GDP (MVAsh) increased from 9% to 14%, and the Medium- and High-tech manufacturing Value-Added share (MHVASH) in total manufacturing value added increased from 41% to 45%. However, during the years 2010 to 2020, concurrent with the Fifth and Sixth Development Plans, both of these mentioned indicators regressed. Notably, the regression in the level of technology for high-tech products, from 0.9% to 0.5%, is continuously declining and poses a fundamental challenge for Iran’s industrial competitiveness.