Calculating the Complexity Index of Internal Production Chains in Iran's economy; application of symmetric product-in-product data Using Input-Output Table

Document Type : applicative

Authors

1 Master of Economic Development and Planning, Economics, Allameh Tabataba’i University, Tehran, Iran.

2 Professor of Economics, Allameh Tabataba'i University, Tehran, Iran.

3 Associate professor of Economics, Allameh Tabataba'i University, Tehran, Iran.

10.30473/jier.2025.74051.1492

Abstract

Production chains play a pivotal role in the economic structure. Countries that have successfully developed production chains have significantly enhanced their economic performance. Given that the completion of production chains and the advancement of downstream industries are central objectives of Iran's Seventh Socio-Economic Development Plan, this study aims to calculate the complexity index of the internal environment of production chains and examine its relationship with upstream and downstream activities within the Iranian economy. To compute the complexity index of the internal environment, the average length of backward and forward linkages is calculated using Leontief's demand-driven model and Ghosh's supply-driven model, based on the most recent input-output table provided by the Central Bank of Iran for the year 2016. This index serves as the foundation for identifying upstream and downstream sectors within the economy. The findings reveal that the complexity index of production chains is greater than one in three product groups include "basic metals," "construction" and "petroleum and chemical products". This indicates that these sectors generate more extensive production chains and are positioned further from the final consumer market, thereby classifying them as downstream products. Conversely, the "crude oil and natural gas extraction" sector demonstrates the lowest complexity index, categorizing it as an upstream product group within the economy. In light of these results, the most critical policy recommendations include completing production chains by transforming crude oil and natural gas into higher-value chemical and petrochemical products, as well as identifying and addressing the missing links within the agricultural production chain.

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Journal of Industrial Economics researches
Volume 8, Issue 29
September 2025
Pages 60-80

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History

  • Receive Date: 13 March 2025
  • Accept Date: 22 May 2025

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