Supreme Leader Ayatollah Ali Khamenei says this is the Iranian year for “boosting production.” This is a welcome slogan for an economy facing numerous challenges, particularly unemployment and pressure on its export performance due to external sanctions. There is no doubt that an expansion of domestic production capacities would have a positive impact on the Iranian economy. However, when looking at some of the realities of how the country’s economic activities are governed, it becomes clear that the planned increase in production is easier said than done.

In his annual Nowruz speech March 21 in the holy city of Mashhad, Khamenei acknowledged some of the impediments, but none of the top leaders in Iran have ever offered genuine remedies for actually removing these obstacles. In order to understand what reforms are needed to address these issues, it is necessary to review the realities the country is facing in the Iranian year that began on the day of the supreme leader's speech.

The first question is what specific areas of domestic production should be boosted. Iran does not have a clear plan as to which sectors to concentrate on in order to benefit from the country’s competitive advantages. In his speech, Khamenei said, “Industrial and agricultural production, stockbreeding, developing large, medium-sized and small industries and even developing handicrafts, homemade products and animal husbandry — breeding livestock in villages — will greatly help the expansion of public welfare in societies.” He added, “Of course, knowledge-based companies play a big part in this regard. They should receive due attention.”

One of the country’s largest sectors is the automotive industry. However, it produces low-quality vehicles that cannot compete against imported cars. This does not seem the place to start.