Abstract
The purpose of this report is to prioritize investments in manufacturing industries thereby paving the way for non-oil export promotion. To identify the selected industrial activities, we made use of several variables including export revenues index (as a substitute variable for industrial activities level of dependence on export markets), industries share of production and export (terms of trade for manufacturing products), share of imported inputs in output value, share of imported inputs in total inputs, ratio of inputs value to output (as a proxy for industries level of dependence on inputs and the possibility to endogenize growth based on level of dependence on imported inputs) and share of industries in investment projects (as a proxy for supply shift among industrial sectors).
Based on our findings, we can classify the industries that have investment priority into resource-based and non resource-based groups. While non resource-based group includes food industries (“food processing and maintenance” and “date rating and packaging”) and leather industries (leather processing for bag making), the resource- based group incorporates chemical industry (“chemical fertilizers and nitrogen production”, “plastic materials production and artificial tires”) and basic metals industry (“basic aluminum products and “precious metals productions”). According to McKenzie Group, for economies with per capita income ranging between     5000   to     7000    dollars, two major investment priorities are food and basic metals industries while chemical industry stands at the fifth level of investment priority. This confirms our findings concerning industrial investment priorities.
Key Words: Prioritization, industrial investment, export-based
 

Executive summary
The purpose of this report is to prioritize investments in manufacturing industries thereby paving the way for non-oil export promotion. To identify the selected industrial activities, we made use of several variables including export revenues index (as a substitute variable for industrial activities level of dependence on export markets), industries share of production and export (terms of trade for manufacturing products), share of imported inputs in output value, share of imported inputs in total inputs, ratio of inputs value to output (as a proxy for industries level of dependence on inputs and the possibility to endogenize growth based on level of dependence on imported inputs) and share of industries in investment projects (as a proxy for supply shift among industrial sectors).
Food industry: Highly dependent on raw materials ( 72.6 percent) while being less dependent on imported inputs, the food industry has the potential to realize considerable export revenues. Despite the fact that just 7.5 percent of the industry is dedicated to exports, it accounts for 5.7 percent of industrial export revenues. The food industry is believed to have high investment priority among countries with per capita income ranging between 5000  to  7000 dollars.
Leather industry: With 94.2 percent dependence on domestic raw materials, leather industry’s share of export revenues is four times greater than domestic sales thanks to the high values of products in international markets compared to domestic ones.
Chemical industries: endowed with cheap natural resources, chemical industry is  a major driver of exports for Iranian economy. Nearly half of the production capacity in “chemical fertilizers and nitrogen production” sector is dedicated to exports. Given the low dependence on imports 5.5 percent and its 4.97 percent share in total export revenues as compared to its 0.91 percent share in total industrial production, the sector is expected to generate considerable export revenues upon investment attraction.
Basic metals: Enjoying natural advantages and regarded as a potentially high revenue generating sector, the industry has a bright perspective. Basic aluminum products subsector accounts for 2.6 percent of export revenues and 0.5 percent of industrial production value in spite of the fact that just percent of its sales capacity has been dedicated to international markets. Given the overall trend of steel replaced by  aluminum during the next decade, the sector can bring about high export revenues for Iran’s economy.