Economy of Iran
Encyclopedia
The economy of Iran is the eighteenth largest in the world by purchasing power parity
(PPP) and according to Iranian officials' claims is going to become the 12th largest by 2015. The economy of Iran is a mixed
and transition economy
with a large public sector and some 50% of the economy centrally planned. It is also a diversifed economy with over 40 industries
directly involved in the Tehran Stock Exchange
. Yet, most of the country's exports are oil and gas
, accounting for a majority of government revenue in 2010.
A unique feature of Iran
's economy is the presence of large religious foundations
, whose combined budgets make up more than 30% of central government spending. Iran is one of the few major economies that has maintained positive growth in the aftermath of the 2008 global financial crisis, despite sanctions imposed by the international community as a result of the country's nuclear program
.
Distortions resulting from a combination of price controls and subsidies, particularly on food and energy
, continue to burden the economy. Contraband, administrative controls, widespread corruption
, and other restrictive factors undermine the potential for private sector-led growth
. The legislature in late 2009 passed President Mahmoud Ahmadinejad's bill to reduce subsidies. This is the most extensive economic reform
since the government implemented gasoline rationing in 2007.
High oil prices in recent years have enabled Iran to amass well over $
100 billion in foreign exchange reserves. Whilst this has aided self-sufficiency and domestic investment, double-digit unemployment and inflation remain problematic. Iran's educated population
, economic inefficiency, and insufficient foreign and domestic investment
have prompted an increasing number of Iranians to seek employment overseas, resulting in a significant "brain drain
".
.
The government's long-term objectives since the revolution have been economic independence
, full employment
, and a comfortable standard of living for citizens, but at the end of the 20th century, the country's economy faced many obstacles. Iran's population
more than from doubled between 1980 and 2000 and grew increasingly younger. Although a relatively large number of Iranians are farmers, agricultural production has consistently fallen since the 1960s. By the late 1990s, Iran had become a major importer of food. At that time, economic hardship in the countryside resulted in vast numbers of people moving to cities.
Following the nationalizations in 1979 and the outbreak of the Iran–Iraq War, over 80% of Iran's economy came under the control of the government. After hostilities with Iraq ceased in 1988, the government tried to develop the country's communication
, transportation
, manufacturing, health care
, education
and energy sectors (including its prospective nuclear power facilities), and began the process of integrating its communication and transportation infrastructure with that of neighboring states. The eight-year war with Iraq claimed at least 300,000 Iranian lives and injured more than 500,000. The cost of the war to the country's economy was some $500 billion.
" in Iran in the coming years.
In the early 21st century the service sector constituted the largest percentage of gross domestic product
(GDP), followed by industry (mining and manufacturing) and agriculture. In 2008 GDP was estimated at $382.3 billion ($842 billion by PPP), or $5,470 per capita ($12,800 by PPP). The GDP figure is projected to double in the next five years. Iran's informal economy
is also important. On account of these figures and the country’s small but diversified industrial base, the United Nations
classifies Iran's economy as semi-developed (1998). Due to huge energy subsidies, it is one of the most energy-inefficient countries in the world, with energy intensity
three times that of the global average and 2.5 times higher than the middle eastern average. In 2009 the ratio of research to GDP was 0.87% against the government's medium-term target of 2.5%. According to Goldman Sachs
, Iran has the strong possibility of becoming one of the world's largest economies in the 21st century
.
, and 13% on general affairs. Between social and economic affairs, payments have averaged 39% on education
, health and social security
, 20% on other social affairs, 3% on agriculture
, 16% on water
, power and gas, 5% on manufacturing and mining
, 12% on roads and transportation
and 5% on other economic affairs. Iran's gross net investment was 27.7% of GDP in 2009. Between 2002 and 2006, the rate of inflation fluctuated around 14%. In 2008, around 55% of the government's revenue came from oil and natural gas revenue, with 31% derived from taxes and fees. The budget for the year 2011
was $500 billion (5,170 trillion rials), an increase of 45% on 2010.
The budget is based on an oil price of $80 per barrel. The value of the US dollar is estimated at IRR 10,500 for the same period.
Iran had around $80 billion in foreign reserves at the start of 2009 and balances its external payments by pricing oil at approximately $75 per barrel. According to the head of the Department of Statistics of Iran, if the rules of budgeting were observed in this very structure, the government could save at least 30 to 35% on its expenses.
The fifth development plan for the period 2010–15 sets guidelines for the socio-economic development of the country. Designed to give power to the people through delegation, the plan is part of "Vision 2025", a strategy for long-term sustainable growth. Under the plan, following annual approval of the government’s budget, the Central Bank of Iran will present a detailed monetary and credit policy to the Money and Credit Council (MCC) for approval. Thereafter, major elements of these policies will be incorporated into the five-year economic development plan. According to the IMF, Iran
is in transition to a market economy from a planned economy
.
are the other main objectives of the fifth plan, an ambitious series of measures
that include subsidy reform, banking, currency
, taxation, customs, construction
, employment, the development of nationwide distribution of goods and services, social justice and productivity. The main intention is to make the country self-sufficient by 2015. By removing energy subsidies, Iran's long term intention is to make its industries more efficient and competitive on the world stage. These reforms target the major sources of inefficiency and price distortion in the country's economy and are likely to lead to major restructuring of almost all economic sectors. The banking sector in Iran is seen as a potential hedge against the removal of subsidies, as the plan is not expected to have a direct impact on banks. Iranian President Mahmoud Ahmadinejad has stated that the country will become the world's 12th largest economy by 2015.
in 1988, the Iranian Government declared its intention to privatize most state industries in an effort to stimulate the war-torn economy. The sale of state-owned factories and companies proceeded slowly, mainly due to opposition by a nationalist majority in the Iranian parliament
. By 2006 most industries, some 70% of the economy, remained state-owned. The majority of heavy industries including steel, petrochemicals, copper, automobiles, and machine tools remained in the public sector, with most light industry privately owned.
Article 44 of the Iranian Constitution stipulates that the country's economy should consist of state, cooperative, and private sectors based on systematic and sound planning. The state sector includes all large-scale industries, foreign trade, major minerals, banking, insurance, power generation, dams and large-scale irrigation networks, radio and television, post, telegraph and telephone services, aviation, shipping, roads, railroads and the like. These will all be publicly owned and administered by the State. Cooperative companies and enterprises concerned with production and distribution in urban and rural areas form the basis of the cooperative sector and will be operated in accordance with Shariah law. As of 2008, 120,000 cooperatives were in operation across the country employing about 15 million people. The private sector consists of enterprises concerned with construction, agriculture, animal husbandry, industry, trade, and services that supplement the economic activities of the state and cooperative sectors.
Since strict interpretation of Article 44 has never been enforced in Iran, the private sector has played a much larger role than that outlined in the constitution. As a result, in recent years the role of this sector has increased whilst a 2004 amendment to the constitution allows 80% of state assets to be privatized. Forty percent of such sales are to be conducted through the "Justice Shares" scheme and the rest through the Tehran Stock Exchange
. The government will retain ownership of the remaining 20%. In 2005, government assets were estimated at around $120 billion. Some $63 billion of such assets were privatized in the period 2005–2010, reducing the government's direct share of gross domestic product (GDP) from 80% to 40%.
suggest the IRGC has ties to over one hundred companies and an annual revenue in excess of $12 billion in business (construction in particular). The Iranian Ministry of Petroleum
has awarded the IRGC billions of dollars in contracts as well as major infrastructure projects. Tasked with control of Iran's borders, the IRGC maintains a monopoly on smuggling, costing Iranian companies billions of dollars in lost business opportunities each year. The smuggling itself is encouraged in part by the generous subsidization of domestic goods (including fuel). IRGC also runs laser eye-surgery clinics, makes cars, builds bridges and roads and is a developer of oil and gas fields.
s, together with several private non-governmental organizations. The bonyads are a consortium of over 120 organizations which are tax-exempt and in receipt of government subsidies and religious donations. They answer directly to the Supreme Leader of Iran
and control over 20% of Iran's GDP. Operating everything from vast soybean and cotton fields to hotels, soft drinks, auto-manufacturing and shipping lines, the bonyads are seen as overstaffed, corrupt, and generally not profitable. Bonyad companies also compete with Iran's unprotected private sector, whose firms complain of the difficulty of competing with bonyad firms whose political connections provide government permits and subsidies, which eliminate worries over the need to make a profit in many market sectors.
, manufacturing, and construction, contributed 42% of GDP and employed 31% of the labor force. Mineral products, notably petroleum
, account for 80% of Iran’s export revenues, even though mining employs less than 1% of the country’s labor force. In 2004 the service sector ranked as the largest contributor to GDP (48%) and employed 44% of workforce. Women made up 33% of the labor force in 2005. Youth unemployment (aged 15-24) was 23% in 2008, resulting in significant brain drain
.
(MDGs). In 2010, Iran's average monthly income was about $500 (GNI per capita in 2009: $10,900 by PPP
). There is a minimum national wage applicable to each sector of activity fixed by the Supreme Labor Council. In 2009 this was about $263 per month ($3,156 per year). The World Bank
reports that in 2001, approximately 20% of household consumption was spent on food, 32% on fuel, 12% on health care, and 8% on education.
The poverty line in Tehran
for the year ending March 20, 2008 was $9,612, while the national average poverty line was $4,932. In 2010, Iran's Department of Statistics announced that 10 million Iranians live under the absolute poverty line and 30 million live under the relative poverty line.
Social security ensures employee protection against unemployment, disease, old age, and occupational accidents. In 2003, the government began consolidation of its welfare organizations in order to eliminate redundancy and inefficiency. In 2003 the minimum standard pension was 50% of the worker’s earnings but no less than the minimum wage. Iran spent 22.5% of its 2003 national budget
on social welfare programs of which more than 50% covered pension costs.
Employees between the age of 18 and 65 years are covered by the social security system with financing shared between the employee (7% of salary), the employer (20–23%) and the state, which in turn supplements the contribution of the employer up to a total value of 3%. Provision of social security is extended to self-employed workers, who voluntarily contribute between 12% and 18% of income depending on the protection sought. Civil servants, the regular military
, law enforcement agencies, and the Iranian Revolutionary Guard Corps all have their own pension systems.
unions operate locally in most areas but are limited largely to issuing credentials and licenses. The right of workers to strike is generally not respected by the state. Since 1979 strikes have often been met by police action.
A comprehensive Iranian labor law covers all facets of labor relations, including hiring of local and foreign staff. This provides a broad and inclusive definition of the individuals it covers, with written, oral, temporary and indefinite employment contracts all recognized. Considered employee-friendly, the labor law makes it extremely difficult to lay off staff. Employing personnel on consecutive six-month contracts (a practice that is used to avoid paying benefits) is illegal, as is dismissing staff without proof of a serious offense. Labor disputes are settled by a special labor council, which usually rules in favor of the employee.
About 11% of Iran's land is arable, with the main food-producing areas located in the Caspian
region and in the valleys of the northwest. Some northern and western areas support rain-fed agriculture, whilst others require irrigation for successful crop production.
Primitive farming methods, overworked and under-fertilized soil, poor seed and scarcity of water are the principal obstacles to agricultural production. About one third of total cultivated land is irrigated. Construction of multipurpose dams and reservoirs along rivers in the Zagros and Alborz
mountains have increased the amount of water available for irrigation. Agricultural production is increasing as a result of modernization, mechanization, improvements to crops and livestock as well as land redistribution programs.
Wheat, the most important crop, is grown mainly in the west and northwest whilst rice is the major crop in the Caspian region. Other crops produced are barley, corn, cotton, sugar beets, tea, hemp, tobacco, fruits, potatoes, legumes (beans and lentils), vegetables, fodder plants (alfalfa and clover), almonds, walnuts and spices including cumin
and sumac
. Iran is also the world's largest producer of saffron
, pistachios, berberis
and berries as well as the second largest producer of dates. The country's meat and dairy products include lamb, goat meat, beef, poultry, milk, eggs, butter and cheese. Wool and leather are also produced whilst honey is collected from beehives and silk harvested from silkworm cocoons. Forestry products from the heavily wooded northern slopes of the Alborz Mountains are economically important although the cutting of trees is strictly controlled by the government, which also runs a reforestation
program. Rivers that drain into the Caspian Sea are fished for salmon, carp, trout, pike and sturgeon, from which caviar
is harvested to make Iran the world's largest producer.
Since the 1979 revolution commercial farming has replaced subsistence farming as the dominant mode of agricultural production. By 1997, the gross value of Iran's agricultural sector products reached $25 billion. Iran has attained 90% self-sufficiency in essential agricultural products, although rice production fails to meet domestic demand thereby making substantial imports necessary. In 2007 Iran reached self-sufficiency in wheat production and for the first time became a net wheat exporter. By 2003, a quarter of Iran's non-oil exports were of agricultural products. Major exports in this category include fresh and dried fruits, nuts, animal hides, processed foods, and spices.
, damaging the large oil refinery at Abadan
where production came to a halt. Reconstruction of the refinery began in 1988 and production resumed in 1993. In spite of the war, many small factories sprang up to produce import-substitution goods and materials needed by the military
.
Iran's major manufactured products are petrochemicals, steel, and copper products. Other important manufactures include automobiles, home and electric appliances, telecommunications equipment, cement and industrial machinery. Iran has gradually become the largest operational base of industrial robots in West Asia. Other products include paper, rubber products, agricultural products, processed foods, leather products
and pharmaceuticals. In 2000, textile mills, using domestic cotton and wool such as Tehran Patou and Iran Termeh employed around 400,000 people around Tehran, Isfahan and along the Caspian coast.
According to The Economist
, Iran was ranked 39th in a list of industrialized nations, producing $23 billion of industrial products in 2008. Between 2008 to 2009 Iran leaped to 28th from 69th place in annual industrial production growth.
A 2003 report by the United Nations Industrial Development Organization
regarding small and medium sized enterprises (SMEs) in Iran identified the following impediments to industrial development:
Despite these problems, recent studies reveal that over the past few years Iran has progressed rapidly in various scientific and technological fields
. Major advancements have taken place in the petrochemical
, pharmaceutical, aerospace
, defense, and heavy industry
sectors. Even in the face of U.S. economic sanctions, Iran appears to be emerging as an industrialized country.
including Persian carpets, ceramics, copperware and brassware, glass, leather goods, textiles, and wooden artifacts. The country's rich carpet-weaving tradition dates from pre-Islamic times and remains an important industry contributing substantial amounts to rural incomes. An estimated 1.2 million weavers in Iran produce carpets for both domestic and international export markets .
More than $500 million worth of hand-woven carpets are exported each year, accounting for 30% of the 2008 world market . Around 5.2 million people work in some 250 fields of the handicraft industry and contribute 3% of GDP.
and Saipa
accounted for 94% of total domestic production. Iran Khodro's Paykan
, replaced by the Samand
in 2005, is the predominant car brand in the country. With 61% of the market in 2001, Iran Khodro was the largest player, whilst Saipa contributed 33% of Iran’s total production in the same year. Other car manufacturers, such as the Bahman Group
, Kerman Motors, Kish Khodro
, Raniran, Traktorsazi, Shahab Khodro and others accounted for 6% of the total market. These automakers produce a wide range of automobiles including motorbikes, passenger cars such as Saipa's Tiba
, vans, mini trucks, medium sized trucks, heavy duty trucks, minibuses, large size buses and other heavy automobiles used for commercial and private activities in the country. In 2009 Iran ranked fifth in car production growth standing next to China, Taiwan, Romania and India. Iran ranked the world's 12th biggest automaker in 2010 and has a fleet of 11.5 million cars. Iran had a total production of 1,395,421 cars in 2010, including 35,901 commercial vehicles.
estimated Iran's defense budget at $7.31 billion, equivalent to 2.6% of GDP or $102 per capita, ranking it 25th in global defense expenditure. The country's defense industry has advanced in the past 25 years and now manufactures many types of arms and equipment. Since 1992, Iran's Defense Industries Organization (DIO)
has produced its own tanks, armored personnel carriers, guided missiles, radar systems, a guided missile destroyer, military vessels, submarines, and a fighter plane. In 2006 Iran exported weapons to 57 countries, including NATO members, and sold $100 million worth of military equipment abroad.
, has given loans up to 102 trillion rials ($10.2 billion) to applicants of Mehr housing scheme. Construction is one of the most important sectors in Iran accounting for 20–50% of total private investment in urban areas and one of the prime investment targets of well off Iranians.
Annual turnover in the construction industry amounted to $38.4 billion in 2005 and $32.8 billion in 2011. Seventy percent of Iranians own their own homes. Because of poor construction quality, many buildings stand in need of anti-seismic reinforcement or renovation. Iran also has a large dam building industry.
Although the petroleum industry provides the majority of revenue, about 75% of all mining sector employees work in mines producing minerals other than oil and natural gas. These include coal, iron ore, copper, lead, zinc, chromium, barite
, salt, gypsum
, molybdenum
, strontium
, silica, uranium, and gold, the latter of which is a mainly a by-product of the Sar Cheshmeh
copper complex operation. The mine at Sar Cheshmeh in Kerman Province is home to the world's second largest lode of copper ore.
Large iron ore deposits exist in central Iran, near Bafq, Yazd
, and Kerman. The government owns 90% of all mines and related large industries in Iran and is seeking foreign investment to development of the mining sector. The sector accounts for 3% of the country’s exports.
Iran has recoverable coal reserves of nearly 1.9 billion short ton
nes. By mid-2008, the country produced about 1.3 million short tonnes of coal annually and consumed about 1.5 million short tonnes, making it a small net importer of coal. The country plans to increase hard-coal production to 5 million tons in 2012 from 2 million tons in November 2008. Main steel mills are located in Isfahan and Khuzestan. Iran became self-sufficient in steel production in 2009. Aluminum and copper production are projected to hit 245,000 and 383,000 tons respectively by March 2009. Cement production reached 65 million tons in 2009, while Iran exports this item to 40 countries.
amounts to six or seven billion dollars per year, whilst energy consumption is much higher than the international norm. Iran recycles 28% of its used oil and gas, whereas some other countries reprocess up to 60%. In 2008 Iran paid out $84 billion in subsidies for oil, gas and electricity. It is the third largest consumer of natural gas in the world after United States and Russia. In 2010 Iran completed its first nuclear power plant at Bushehr
with Russian assistance.
Iran has been a major oil exporter since 1913. The country's major oil fields lie in the central and southwestern parts of the western Zagros mountains. Oil is also found in northern Iran and in the offshore waters of the Persian Gulf. In 1978, Iran ranked as the world's fourth largest oil producer, OPEC
's second largest oil producer and second largest oil exporter. Following the 1979 revolution the new government reduced daily oil production in accordance with its oil conservation policy. A further decline in production occurred as result of damage to oil facilities during the Iraq-Iran war. Oil production rose in the late 1980s as pipelines were repaired and newly discovered oil fields in the Persian Gulf exploited. By 2004, Iran’s annual oil production reached 1.4 billion barrels producing a net profit of $50 billion. Officials in Iran estimate that Iran's annual oil and gas revenues could reach $250 billion by 2015 once current projects come on stream. Iran manufactures 60–70% of its industrial equipment domestically, including refineries, oil tankers, drilling rigs, offshore platforms and exploration instruments.
Major refineries
located at Abadan (site of the country's first refinery), Kermanshah, and Tehran failed to meet domestic demand for gasoline in 2009. Iran's refining industry requires $15 billion in investment over the period 2007–2012 to become self-sufficient and end imports. Pipelines move oil from the fields to the refineries
and to such exporting ports as Abadan, Bandar-e Mashur, and Kharg Island
. Since 1997, Iran's state-owned oil and gas industry
has entered into major exploration and production agreements with foreign consortia. In 2008 the Iranian Oil Bourse
(IOB) was inaugurated in Kish Island. The IOB is intended as an oil bourse for petroleum, petrochemicals and gas in various currencies. Trading is primarily in the euro
and Iranian rial
along with a basket of other major currencies, excluding the US dollar. Thanks to a fertilizer plant in Shiraz
, the largest ethylene unit in the world, in Asalouyeh
, and the completion of many other special economic zone projects, Iran's exports in petrochemicals reached $5.5 billion in 2007, $9 billion in 2008 and $7.6 billion during the first ten months of the Iranian calendar year 2010. According to Iran's Petroleum Ministry, Iran plans to invest $500 billion in its oil sector
until 2025.
Urbanization has contributed to significant growth in the service sector. Important service industries include public services (including education), commerce, personal services, professional services, and tourism. Iran's national science budget in 2005 was about $900 million, roughly equivalent to the 1990 figure. By early 2000, Iran allocated around 0.4% of its GDP to research and development, ranking the country "far behind industrialized societies" and the world average of 1.4%.
The total value of transport and communications GDP is expected to rise to $46 billion in nominal terms by 2013, representing 6.8% of Iran’s GDP. Projections based on employment figures compiled for the International Labor Organization in 1996 suggest that Iran’s transport and communications sector employed 3.4 million people, or 20.5% of the labor force in 2008.
), and independent retailers operating in bazaar
s. The bulk of food sales occur at street markets with prices set by the Chief Statistics Bureau. Iran has 438,478 small grocery retailers. These are especially popular in cities other than Tehran where the number of hypermarkets and supermarkets is still very limited. More mini-markets and supermarkets are emerging, but these are mostly one-off, independently owned operations. The biggest chainstores are state-owned Etka, Refah, Shahrvand
and Hyperstar Market
. Electronic commerce in Iran passed the $1 billion mark in 2009.
The constitution entitles Iranians to basic health care
. By 2008, 73% of all Iranians were covered by the voluntary national health insurance system. Although over 85% of the population use an insurance system to reimburse their drug expenses, the government heavily subsidizes pharmaceutical production/importation in order to increase affordability of medicines and vaccines. The total market value of Iran’s health and medical sector
was $24 billion in 2002 and was forecast to rise to $50 billion by 2013, reflecting the increasing demand on medical services. In 2006, 55 pharmaceutical companies in Iran produced 96% (quantitatively) of the medicines for a market worth $1.2 billion. This figure is projected to increase to $3.65 billion by 2013.
, while a small percentage of tourists (about 10%) came from the countries of the European Union and North America.
The most popular tourist destinations are Isfahan, Mashhad
, and Shiraz
. In the early 2000s the industry still faced serious limitations in infrastructure, communications, industry standards, and personnel training. The majority of the 300,000 tourist visas granted in 2003 were obtained by Asian Muslims, who presumably intended to visit important pilgrimage
sites in Mashhad
and Qom
. Several organized tours from Germany, France, and other European countries come to Iran annually to visit archaeological sites and monuments. In 2003 Iran ranked 68th in tourism revenues worldwide. According to UNESCO
and the deputy head of research for Iran Travel and Tourism Organization (ITTO), Iran is rated among the "10 most touristic countries in the world".
which had an average official exchange rate of 9,326 rials to the U.S. dollar in 2007. Rials are also exchanged on the unofficial market at a higher rate. In 1979, the government nationalized all private banks. A banking system was subsequently created where, in accordance with Islamic law
, interest on loans was replaced with handling fees. This system went into effect in the mid-1980s. In 2008 Iranian reserves in foreign banks reached $81 billion.
The banking system consists of a central bank, the Bank Markazi, which issues currency and oversees all state and private banks. Several commercial banks headquartered in Tehran have branches throughout the country. There are also two development banks and a housing bank that specializes in home mortgages. The government began to privatize the banking sector in 2001 when licenses were issued to two new privately owned banks.
The accounts of the state-owned commercial banks are dominated by loans to the state, bonyad
enterprises, large-scale private firms and four thousand wealthy or connected individuals who do not always repay their loans. While most Iranians have difficulties obtaining small home loans, 90 persons have managed to secure collective facilities totaling $8 billion from banks. In 2009, GIO
informed that Iranian banks have some $38 billion of delinquent loans, while they are only capitalized at $20 billion.
As of 2010, the Tehran Stock Exchange
trades the shares of more than 330 registered companies. The stock market capitalization of listed companies in Iran was valued at $100 billion in 2011. According to experts, Iran offers many investment opportunities, particularly on its Tehran Stock Exchange. In 2010, Iran attracted almost $11.9 billion from abroad, of which $3.6 billion was FDI
, $7.4 billion was from international commercial bank loans, and around $900 million consisted of loans and projects from international development banks.
Insurance premiums accounted for just under 1% of GDP in 2008, a figure partly attributable to low average income per head. Five state-owned insurance firms dominate the market, four of which are active in commercial insurance. The leading player is the Iran Insurance Company, followed by Asia, Alborz and Dana insurances. In 2001/02 third-party liability insurance accounted for 46% of premiums, followed by health insurance (13%), fire insurance (10%) and life insurance (9.9%).
Broadcast media, including five national radio stations and five national television networks as well as dozens of local radio and television stations are run by the government. In 2008 there were 345 telephone lines and 106 personal computers for every 1,000 residents. Personal computers for home use became more affordable in the mid-1990s, since when demand for Internet access has increased rapidly. As of 2010, Iran also had the world's third largest number of bloggers
(2010). In 1998 the Ministry of Post, Telegraph & Telephone (later renamed the Ministry of Information & Communication Technology
) began selling Internet accounts to the general public. In 2006, revenues from the Iranian telecom industry were estimated at $1.2 billion. In 2006 Iran had 1,223 Internet Service Providers (ISPs), all private sector operated.
According to the World Bank
, Iran's information and communications technology sector had a 1.4% share of GDP in 2008. Around 150,000 people are employed in this sector, including 20,000 in the software industry. There were 1,200 registered IT companies in 2002, 200 of which were involved in software development. In 2008 software exports stood at $50 million. By the end of 2009, Iran's telecom market was the fourth-largest market in the Middle East at $9.2 billion and is expected to grow to $12.9 billion by 2014 at a compound annual growth rate (CAGR) of 6.9%.
The country’s major port of entry is Bandar-Abbas on the Strait of Hormuz
. After arriving in Iran, imported goods are distributed throughout the country by trucks and freight trains. The Tehran–Bandar-Abbas railroad, opened in 1995, connects Bandar-Abbas to the railroad system of Central Asia via Tehran and Mashhad
. Other major ports include Bandar Anzali and Bandar Torkaman
on the Caspian Sea and Khoramshahr and Bandar Imam Khomeini
on the Persian Gulf
. Dozens of cities have airports serving passenger and cargo planes. Iran Air
, the national airline, was founded in 1962 and operates domestic and international flights. All large cities have mass transit systems using buses whilst several private companies provide bus services between cities. Tehran, Mashhad, Shiraz
, Tabriz
, Ahvaz
and Isfahan are in the process of constructing underground railways. More than one million people work in the transportation sector, accounting for 9% of 2008 GDP.
Iran is a founding member of OPEC
and the Organization of Gas Exporting Countries. Petroleum constitutes 80% of Iran's exports with a value of $46.9 billion in 2006. Iran's non-oil exports stood at $16.3 billion in 2007, a rise of 47.2% over the previous year, and $25 billion in 2010. Pistachios, liquefied propane, methanol (methyl alcohol), hand-woven carpets and automobiles are the core items of Iran's non-oil exports. Iran's exports of technical and engineering services in 2007–08 were $2.7 billion of which 40% of technical services pertained to Central Asia and the Caucasus, 30% ($350 million) to Iraq, and close to 20% ($205 million) to Africa.
Iranian firms have implemented projects in different fields such as energy, pipelines, irrigation, dam construction and power generation in different countries. The country has made the development of non-oil exports a priority and has the advantage of a broad domestic industrial base, an educated and motivated workforce as well as a favorable location, which gives it access to an estimated population of some 300 million people in Caspian
markets, Persian Gulf states and some ECO countries
further east.
The total volume of imports to Iran rose by 189% from $13.7 billion in 2000 to $39.7 billion in 2005. and $55.189 billion in 2009. Iran is among the few countries that has maintained positive GDP growth despite the 2008 global financial crisis. Iran's major commercial partners are China
, India, Germany
, South Korea, Japan, France
, Russia
and Italy
. From 1950 until 1978, the United States
was Iran's foremost economic and military partner, playing a major role in the modernization of its infrastructure and industry.
Since the mid 90's, Iran has increased its economic cooperation with other developing countries
in "south-south integration
" including Syria, India, China, South Africa, Cuba and Venezuela. Iran's trade with India passed the $13 billion mark in 2007, an 80% increase in trade volume within a year. Iran is expanding its trade ties with Turkey and Pakistan
and shares with its partners the common objective to create the ECO
, a single economic market in West and Central Asia.
Since 2003, Iran
has increased investment in the economic development and reconstruction of neighboring countries such as Iraq and Afghanistan. In Dubai, UAE, it is estimated that Iranian expatriates
handle over 20% of its domestic economy and account for an equal proportion of its population. Migrant Iranian workers abroad remitted less than $2 billion home in 2006. Between 2005 and 2009, trade between Dubai and Iran tripled to $12 billion; money invested in the local real estate market and import-export businesses, collectively known as the Bazaar
, and geared towards providing Iran and other countries with required consumer goods. It is estimated that one third of Iran's imported goods and exports are delivered through the black market, underground economy, and illegal jetties.
(NIOC) in the form of an allocated production share. Operation of the field was then transferred to NIOC after a set number of years, thereby completing the contract.
Unfavorable or complex operating requirements and international sanctions
have hindered foreign investment in the country, despite liberalization of relevant regulations by the Iranian government in the early 2000s. Iran absorbed $24.3 billion of foreign investment between the Iranian calendar
years 1993 and 2007. Foreign direct investment in Iran
hit a record $10.2 billion in 2007 from $4.2 billion in 2005 and $2 million in 1994. Foreign transactions with Iran amounted to $150 billion of major contracts between 2000 and 2007, including private and government lines of credit. In 2007, Iran had $62 billion worth of assets abroad. The EIU
estimates that Iran's net FDI will rise by 100% between 2010–2014.
Foreign investors have concentrated their activities in the energy, vehicle manufacture, copper mining, construction, utilities, petrochemicals, clothing, food and beverages, telecom and pharmaceuticals sectors. Iran is a member of the World Bank's Multilateral Investment Guarantee Agency
. In 2006, the combined net worth of Iranian citizens abroad was about 1.3 trillion dollars.
According to the head of the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), Iran ranked 142 among 181 countries in terms of working conditions in 2008. Iran stands at number 96 in terms of business start-up, 165 in obtaining permits, 147 in employment, 147 in asset registration, 84 in obtaining credit, 164 in legal support for investments, 104 in tax payments, 142 in overseas trade, 56 in contract feasibility and 107 in bankruptcy. Iran ranks 62nd in the World Economic Forum
's 2011 analysis of the global competitiveness of 142 countries
.
Firms from over 50 countries invested in Iran between 1992–2008, with Asia and Europe the largest participants as shown below:
(WTO) since 2005. Although the United States has consistently blocked Iran's bid to join the WTO since it first asked for membership, the country was accepted in a goodwill gesture to ease nuclear negotiations between Iran and the international community.
Should Iran eventually gain membership status in the WTO
, among other prerequisites, copyright law
s will have to be enforced in the country. This will require a major overhaul of business and trade operations. The country is hoping to attract billions of dollars worth of foreign investment whilst creating a more favorable investment climate through reduced restrictions and duties on imports. Creation of free trade zone
s such as Qeshm
, Chabahar
and Kish Island should also assist in this process. Iran has allocated $20 billion in 2010 to loans for the launch of twenty trade centers in other countries.
in 1979, the United States ended its economic and diplomatic ties with Iran, banned Iranian oil imports and froze approximately $11 billion of its assets. In 1996, the U.S. Government passed the Iran and Libya Sanctions Act
(ILSA) which prohibits U.S. (and non-U.S. companies) from investing and trading with Iran in amounts of more than $20 million annually. Since 2000 exceptions to this restriction have been made for items including pharmaceuticals and medical equipment.
Iran's Nuclear Program has been the subject of contention with the West since 2006 over suspicions of Iran's military intentions. This has led the UN Security Council to impose sanctions
against select companies linked to the nuclear program, thus furthering the country's economic isolation on the international scene. Sanctions notably bar nuclear, missile and many military exports to Iran and target investments in oil, gas and petrochemicals, exports of refined petroleum products, as well as the Iranian Revolutionary Guard Corps, banks, insurance, financial transactions and shipping
.
Government websites Central Bank of Iran (Including detailed statistics about Iran's economy and sectors) Trade Promotion Organization of Iran – Many useful information about trade, FDI, economic reports, customs, laws, statistics, links and opportunities for investors in Iran (Affiliated to Iran's Ministry of Commerce
)
General
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
(PPP) and according to Iranian officials' claims is going to become the 12th largest by 2015. The economy of Iran is a mixed
Mixed economy
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety...
and transition economy
Transition economy
A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a free market. Transition economies undergo economic liberalization, where market forces set prices rather than a central planning organization and trade barriers are removed,...
with a large public sector and some 50% of the economy centrally planned. It is also a diversifed economy with over 40 industries
Industry of Iran
According to a report by the Economist, Iran has been ranked 39th for producing $23 billion of industrial products in 2008. From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate. A recent report by the World Fact Book ranks Iran 3rd among...
directly involved in the Tehran Stock Exchange
Tehran Stock Exchange
The Tehran Stock Exchange is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. As of July 2010, 337 companies with a market capitalization of US$72 billion were listed on TSE...
. Yet, most of the country's exports are oil and gas
Petroleum industry in Iran
In 2004 Iran produced 5.1 percent of the world’s total crude oil , which generated revenues of US$25 billion to US$30 billion and was the country’s primary source of foreign currency. At 2006 levels of production, oil proceeds represented about 18.7 percent of gross domestic product . However, the...
, accounting for a majority of government revenue in 2010.
A unique feature of Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
's economy is the presence of large religious foundations
Bonyad
Bonyads are charitable trusts in Iran that play a significant role in Iran's non-petroleum economy, controlling an estimated 20% of Iran's GDP. Exempt from taxes, they have been called "bloated", and "a major weakness of Iran’s economy", and criticized for reaping "huge subsidies from government",...
, whose combined budgets make up more than 30% of central government spending. Iran is one of the few major economies that has maintained positive growth in the aftermath of the 2008 global financial crisis, despite sanctions imposed by the international community as a result of the country's nuclear program
Nuclear program of Iran
The nuclear program of Iran was launched in the 1950s with the help of the United States as part of the Atoms for Peace program. The support, encouragement and participation of the United States and Western European governments in Iran's nuclear program continued until the 1979 Iranian Revolution...
.
Distortions resulting from a combination of price controls and subsidies, particularly on food and energy
Energy in Iran
Energy resources in Iran consist of the third largest oil reserves and the second largest natural gas reserves in the world. Iran is in a constant battle to use its energy resources more effectively in the face of subsidization and the need for technological advances in energy exploration and...
, continue to burden the economy. Contraband, administrative controls, widespread corruption
Corruption in Iran
The Islamic Republic of Iran suffers from widespread corruption.- Corruption levels :According to Transparency International, which publishes the annual Corruption Perception Index, in 2009 Iran fell from 141st on the list of 180 countries to eighth from bottom – one of the most marked...
, and other restrictive factors undermine the potential for private sector-led growth
Privatization in Iran
According to the Fourth Five-Year Economic Development Plan , the Privatization Organization of Iran affiliated to the Ministry of Economic Affairs and Finance is in charge of setting prices and ceding shares to the general public and on the Tehran Stock Exchange...
. The legislature in late 2009 passed President Mahmoud Ahmadinejad's bill to reduce subsidies. This is the most extensive economic reform
Iranian Economic Reform Plan
The Iranian targeted subsidy plan also known as the subsidy reform plan was passed by the Iranian Parliament on January 5, 2010. The government has described the subsidy plan as the "biggest surgery" to the nation's economy in half a century and "one of the most important undertakings in Iran's...
since the government implemented gasoline rationing in 2007.
High oil prices in recent years have enabled Iran to amass well over $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
100 billion in foreign exchange reserves. Whilst this has aided self-sufficiency and domestic investment, double-digit unemployment and inflation remain problematic. Iran's educated population
Education in Iran
Education in Iran is highly centralized and is divided to K-12 education and higher education. K-12 education is supervised by the Ministry of Education and higher education is under supervision of Ministry of Science and Technology....
, economic inefficiency, and insufficient foreign and domestic investment
Foreign Direct Investment in Iran
Foreign direct investment in Iran has been hindered by unfavorable or complex operating requirements and by international sanctions, although in the early 2000s the Iranian government liberalized investment regulations. Iran ranks 62nd in the World Economic Forum's 2011 analysis of the global...
have prompted an increasing number of Iranians to seek employment overseas, resulting in a significant "brain drain
Iran's brain drain
According to the International Monetary Fund, the Islamic Republic of Iran ranks first in "brain drain" among 61 "developing" and "less developed" countries it measured....
".
History
Prior to 1979, Iran's economic development was rapid. Traditionally an agricultural society, by the 1970s the country had undergone significant industrialization and economic modernization. This pace of growth had slowed dramatically by 1978 as capital flight reached $30 to $40 billion US dollars just before the revolutionIranian Revolution
The Iranian Revolution refers to events involving the overthrow of Iran's monarchy under Shah Mohammad Reza Pahlavi and its replacement with an Islamic republic under Ayatollah Ruhollah Khomeini, the leader of the...
.
The government's long-term objectives since the revolution have been economic independence
Independence
Independence is a condition of a nation, country, or state in which its residents and population, or some portion thereof, exercise self-government, and usually sovereignty, over its territory....
, full employment
Full employment
In macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so....
, and a comfortable standard of living for citizens, but at the end of the 20th century, the country's economy faced many obstacles. Iran's population
Demographics of Iran
Iran's population increased dramatically during the later half of the 20th century, reaching about 75 million by 2011. In recent years, however, Iran's birth rate has dropped significantly. Studies project that Iran's rate of population growth will continue to slow until it stabilizes above 100...
more than from doubled between 1980 and 2000 and grew increasingly younger. Although a relatively large number of Iranians are farmers, agricultural production has consistently fallen since the 1960s. By the late 1990s, Iran had become a major importer of food. At that time, economic hardship in the countryside resulted in vast numbers of people moving to cities.
Following the nationalizations in 1979 and the outbreak of the Iran–Iraq War, over 80% of Iran's economy came under the control of the government. After hostilities with Iraq ceased in 1988, the government tried to develop the country's communication
Communications in Iran
Iran’s telecommunications industry is almost entirely state-owned, dominated by the Telecommunication Company of Iran . Fixed-line penetration in 2004 was relatively well-developed by regional standards, standing at 22 lines per 100 people, higher than Egypt with 14 and Saudi Arabia with 15,...
, transportation
Transport in Iran
Transport in Iran is inexpensive because of the government's subsidization of the price of gasoline. The downside is economic inefficiency because of highly wasteful consumption patterns, contraband with neighboring countries and air pollution...
, manufacturing, health care
Health care in Iran
Health care in Iran and medical sector's market value was almost US $24 billion in 2002 and was forecast to rise to US $31 billion by 2007. With a population of almost 70 million, Iran is one of the most populous countries in the Middle East...
, education
Education in Iran
Education in Iran is highly centralized and is divided to K-12 education and higher education. K-12 education is supervised by the Ministry of Education and higher education is under supervision of Ministry of Science and Technology....
and energy sectors (including its prospective nuclear power facilities), and began the process of integrating its communication and transportation infrastructure with that of neighboring states. The eight-year war with Iraq claimed at least 300,000 Iranian lives and injured more than 500,000. The cost of the war to the country's economy was some $500 billion.
Macro-economic trends
More than two-thirds of the population (74 million people) is under the age of 30 while net enrollment at primary school level is almost 100%, preluding a secondary "demographic boomDemographics of Iran
Iran's population increased dramatically during the later half of the 20th century, reaching about 75 million by 2011. In recent years, however, Iran's birth rate has dropped significantly. Studies project that Iran's rate of population growth will continue to slow until it stabilizes above 100...
" in Iran in the coming years.
In the early 21st century the service sector constituted the largest percentage of gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP), followed by industry (mining and manufacturing) and agriculture. In 2008 GDP was estimated at $382.3 billion ($842 billion by PPP), or $5,470 per capita ($12,800 by PPP). The GDP figure is projected to double in the next five years. Iran's informal economy
Informal economy
The informal sector or informal economy as defined by governments, scholars, banks, etc. is the part of an economy that is not taxed, monitored by any form of government, or included in any gross national product , unlike the formal economy....
is also important. On account of these figures and the country’s small but diversified industrial base, the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
classifies Iran's economy as semi-developed (1998). Due to huge energy subsidies, it is one of the most energy-inefficient countries in the world, with energy intensity
Energy intensity
]Energy intensity is a measure of the energy efficiency of a nation's economy. It is calculated as units of energy per unit of GDP.* High energy intensities indicate a high price or cost of converting energy into GDP....
three times that of the global average and 2.5 times higher than the middle eastern average. In 2009 the ratio of research to GDP was 0.87% against the government's medium-term target of 2.5%. According to Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Iran has the strong possibility of becoming one of the world's largest economies in the 21st century
Next Eleven
The Next Eleven are eleven countries—Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam — identified by Goldman Sachs investment bank and Jim O'Neill as having a high potential of becoming, along with the BRICS, the world's largest...
.
| Year (Source: IMF International Monetary Fund The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world... ) |
GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... , current prices (billions IRR Iranian rial The rial is the currency of Iran. It is subdivided into 100 dinar but, because of the very low current value of the rial, no fraction of the rial is used in accounting.... ) |
Implied PPP Purchasing power parity In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates... conversion rate (USD/IRR) |
GDP at PPP per capita (current international dollar) |
Inflation Inflation In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a... index (average CPI Consumer price index A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of... ) (2000=100) |
Population (million persons) |
|---|---|---|---|---|---|
| 1980 | 6,622 | 58 | 2,974 | 2 | 38 |
| 1985 | 16,556 | 77 | 4,507 | 4 | 48 |
| 1990 | 35,315 | 144 | 4,489 | 12 | 55 |
| 1995 | 185,928 | 569 | 5,094 | 43 | 64 |
| 2000 | 580,473 | 1,341 | 6,800 | 100 | 64 |
| 2005 | 1,697,305 | 2,675 | 9,268 | 190 | 68 |
| 2010 (est.) | 3,698,348 | 4,307 | 11,396 | 377 | 75 |
Fiscal and monetary policy
Since the 1979 revolution, government spending has averaged 59% on social policies, 17% on economic matters, 15% on national defenseMilitary of Iran
The Armed Forces of the Islamic Republic of Iran include the IRIA and the IRGC and the Police Force .These forces total about 545,000 active personnel . All branches of armed forces fall under the command of General Headquarters of Armed Forces...
, and 13% on general affairs. Between social and economic affairs, payments have averaged 39% on education
Education in Iran
Education in Iran is highly centralized and is divided to K-12 education and higher education. K-12 education is supervised by the Ministry of Education and higher education is under supervision of Ministry of Science and Technology....
, health and social security
Social Security Organization (Iran)
Social Security Organization is a social insurer organization in Iran which provides coverage of wage-earners and salaried workers as well as voluntary coverage of self-employed persons...
, 20% on other social affairs, 3% on agriculture
Agriculture in Iran
Roughly one-third of Iran's total surface area is suited for farmland, but because of poor soil and lack of adequate water distribution in many areas, most of it is not under cultivation....
, 16% on water
Water supply and sanitation in Iran
Water supply and sanitation in Iran has witnessed some important improvements, especially in terms of increased access to urban water supply, while important challenges remain, particularly concerning sanitation and service provision in rural areas....
, power and gas, 5% on manufacturing and mining
Mining in Iran
Mining in Iran is under-developed. Yet the country is one of the most important mineral producers in the world, ranked among 15 major mineral rich countries, holding some 68 types of minerals, 37 billion tonnes of proven reserves and more than 57 billion tonnes of potential reservoirs....
, 12% on roads and transportation
Transport in Iran
Transport in Iran is inexpensive because of the government's subsidization of the price of gasoline. The downside is economic inefficiency because of highly wasteful consumption patterns, contraband with neighboring countries and air pollution...
and 5% on other economic affairs. Iran's gross net investment was 27.7% of GDP in 2009. Between 2002 and 2006, the rate of inflation fluctuated around 14%. In 2008, around 55% of the government's revenue came from oil and natural gas revenue, with 31% derived from taxes and fees. The budget for the year 2011
Iranian calendar
The Iranian calendars or sometimes called Persian calendars are a succession of calendars invented or used for over two millennia in Greater Iran...
was $500 billion (5,170 trillion rials), an increase of 45% on 2010.
The budget is based on an oil price of $80 per barrel. The value of the US dollar is estimated at IRR 10,500 for the same period.
Iran had around $80 billion in foreign reserves at the start of 2009 and balances its external payments by pricing oil at approximately $75 per barrel. According to the head of the Department of Statistics of Iran, if the rules of budgeting were observed in this very structure, the government could save at least 30 to 35% on its expenses.
Five-year socio-economic development plan
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
is in transition to a market economy from a planned economy
Transition economy
A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a free market. Transition economies undergo economic liberalization, where market forces set prices rather than a central planning organization and trade barriers are removed,...
.
Economic reform plan
Expansion of public healthcare and international relationsForeign relations of Iran
Foreign relations of Iran refers to inter-governmental relationships between Iran and other countries. Following the 1979 Iranian Revolution, the newly-born Islamic Republic, under the leadership of Ayatollah Khomeini, dramatically reversed the pro-Western foreign policy of the last Shah of Iran,...
are the other main objectives of the fifth plan, an ambitious series of measures
Iranian Economic Reform Plan
The Iranian targeted subsidy plan also known as the subsidy reform plan was passed by the Iranian Parliament on January 5, 2010. The government has described the subsidy plan as the "biggest surgery" to the nation's economy in half a century and "one of the most important undertakings in Iran's...
that include subsidy reform, banking, currency
Iranian rial
The rial is the currency of Iran. It is subdivided into 100 dinar but, because of the very low current value of the rial, no fraction of the rial is used in accounting....
, taxation, customs, construction
Construction in Iran
In recent years, the construction industry of Iran has been thriving due to an increase in national and international investment to the extent that it is now the largest in the Middle East region...
, employment, the development of nationwide distribution of goods and services, social justice and productivity. The main intention is to make the country self-sufficient by 2015. By removing energy subsidies, Iran's long term intention is to make its industries more efficient and competitive on the world stage. These reforms target the major sources of inefficiency and price distortion in the country's economy and are likely to lead to major restructuring of almost all economic sectors. The banking sector in Iran is seen as a potential hedge against the removal of subsidies, as the plan is not expected to have a direct impact on banks. Iranian President Mahmoud Ahmadinejad has stated that the country will become the world's 12th largest economy by 2015.
| Item | 2010 (achieved) | 2010–15 (target) |
|---|---|---|
| GDP world ranking | 18th largest economy by PPP | 12th in 2015 |
| Annual growth rate | 2.6% | 8% on average; BMI forecast: 3.6% on average (2009–14) |
| Unemployment Labour and tax laws in Iran Taxation in Iran generates particular unease among foreign firms because they appear to be arbitrarily enforced – tax bills are initially based on 'assumed earnings' calculated by the Finance and Economy Ministry according to the size of the company and the sector in which it operates... |
11.8% according to government; unofficially: 12–22%; 30% according to opposition | 7% by 2015, by creating 1 million new jobs each year |
| Inflation rate Inflation rate In economics, the inflation rate is a measure of inflation, the rate of increase of a price index . It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal.The inflation rate is used to calculate the real interest... |
15% (as of January 2010) | 12% on average |
| Value Added Tax | 3% | 8% |
| R&D (% GDP) | 0.87% | 2.5% |
| Oil price & revenues in budget | $60 per barrel | $65 per barrel on average / $250 billion in oil and gas revenues in 2015 once the current projects come on stream; International Monetary Fund International Monetary Fund The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world... projections: ~$60 billion only |
| Oil production | 4.1 million bpd | 5.2 million bpd |
| Natural gas production | 900 million cubic meter/day | |
| Share of non-oil exports | 20% | 30% ($110 billion) by 2015 |
| Investment in oil and gas industry Energy in Iran Energy resources in Iran consist of the third largest oil reserves and the second largest natural gas reserves in the world. Iran is in a constant battle to use its energy resources more effectively in the face of subsidization and the need for technological advances in energy exploration and... |
$20 billion a year in private and foreign investment Foreign Direct Investment in Iran Foreign direct investment in Iran has been hindered by unfavorable or complex operating requirements and by international sanctions, although in the early 2000s the Iranian government liberalized investment regulations. Iran ranks 62nd in the World Economic Forum's 2011 analysis of the global... , in part to boost oil refining capacity |
|
| Petrochemical output | ~50 million tpy | 100 million tpy |
| Bunkering | 25% market share in Persian Gulf Persian Gulf The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers... |
50% market share or 7.5 million tpy of liquid fuel |
| Oil products storage capacity | 11.5 billion liters | 16.7 billion liters |
| Electricity generation capacity | 61,000 MW | increase in electricity generation capacity by 25,000 MW |
| Efficiency of power plants | 38% | 45% |
| Investment in mining and industry Industry of Iran According to a report by the Economist, Iran has been ranked 39th for producing $23 billion of industrial products in 2008. From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate. A recent report by the World Fact Book ranks Iran 3rd among... |
$70 billion/700,000 billion rials Iranian rial The rial is the currency of Iran. It is subdivided into 100 dinar but, because of the very low current value of the rial, no fraction of the rial is used in accounting.... |
|
| Crude steel production | ~10 million tpy | 42 million tpy by 2015 |
| Iron ore production | ~27 million tpy | 66 million tpy by 2015 |
| Cement | ~71 million tpy | 110 million tpy |
| Limestone Limestone Limestone is a sedimentary rock composed largely of the minerals calcite and aragonite, which are different crystal forms of calcium carbonate . Many limestones are composed from skeletal fragments of marine organisms such as coral or foraminifera.... |
166 million tpy | |
| New industrial parks | 50 new industrial parks to be built by 2015 | |
| Tourism Tourism in Iran Tourism attracted 2.3 million people to Iran in 2009. Iran plans to have 20 million tourists annually by 2015 .... |
20 million tourists annually by 2015 (including domestic tourism) | |
| Ports capacity | 150 million tons | 200 million tons |
| Railway network development | $8 billion investment per annum | |
| Electronic trade | 20% of domestic trade, 30% of foreign trade and 80% of government transactions to be made electronically. |
Centralization and privatization
Following the cessation of hostilities with IraqIran-Iraq War
The Iran–Iraq War was an armed conflict between the armed forces of Iraq and Iran, lasting from September 1980 to August 1988, making it the longest conventional war of the twentieth century...
in 1988, the Iranian Government declared its intention to privatize most state industries in an effort to stimulate the war-torn economy. The sale of state-owned factories and companies proceeded slowly, mainly due to opposition by a nationalist majority in the Iranian parliament
Majlis of Iran
The National Consultative Assembly of Iran , also called The Iranian Parliament or People's House, is the national legislative body of Iran...
. By 2006 most industries, some 70% of the economy, remained state-owned. The majority of heavy industries including steel, petrochemicals, copper, automobiles, and machine tools remained in the public sector, with most light industry privately owned.
Article 44 of the Iranian Constitution stipulates that the country's economy should consist of state, cooperative, and private sectors based on systematic and sound planning. The state sector includes all large-scale industries, foreign trade, major minerals, banking, insurance, power generation, dams and large-scale irrigation networks, radio and television, post, telegraph and telephone services, aviation, shipping, roads, railroads and the like. These will all be publicly owned and administered by the State. Cooperative companies and enterprises concerned with production and distribution in urban and rural areas form the basis of the cooperative sector and will be operated in accordance with Shariah law. As of 2008, 120,000 cooperatives were in operation across the country employing about 15 million people. The private sector consists of enterprises concerned with construction, agriculture, animal husbandry, industry, trade, and services that supplement the economic activities of the state and cooperative sectors.
Since strict interpretation of Article 44 has never been enforced in Iran, the private sector has played a much larger role than that outlined in the constitution. As a result, in recent years the role of this sector has increased whilst a 2004 amendment to the constitution allows 80% of state assets to be privatized. Forty percent of such sales are to be conducted through the "Justice Shares" scheme and the rest through the Tehran Stock Exchange
Tehran Stock Exchange
The Tehran Stock Exchange is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. As of July 2010, 337 companies with a market capitalization of US$72 billion were listed on TSE...
. The government will retain ownership of the remaining 20%. In 2005, government assets were estimated at around $120 billion. Some $63 billion of such assets were privatized in the period 2005–2010, reducing the government's direct share of gross domestic product (GDP) from 80% to 40%.
Iranian Revolutionary Guard Corps
The Iranian Revolutionary Guard Corps (IRGC) are thought to control about one third of Iran's economy through a series of subsidiaries and trusts. Estimates by the Los Angeles TimesLos Angeles Times
The Los Angeles Times is a daily newspaper published in Los Angeles, California, since 1881. It was the second-largest metropolitan newspaper in circulation in the United States in 2008 and the fourth most widely distributed newspaper in the country....
suggest the IRGC has ties to over one hundred companies and an annual revenue in excess of $12 billion in business (construction in particular). The Iranian Ministry of Petroleum
Ministry of Petroleum of Iran
The Ministry of Petroleum manages the oil industry, the producer of oil and petrochemical products. MoP is in charge of all issues pertaining to exploration, extraction, exploitation, distribution and exportation of crude oil and oil products. In addition, according to the "", issuing import...
has awarded the IRGC billions of dollars in contracts as well as major infrastructure projects. Tasked with control of Iran's borders, the IRGC maintains a monopoly on smuggling, costing Iranian companies billions of dollars in lost business opportunities each year. The smuggling itself is encouraged in part by the generous subsidization of domestic goods (including fuel). IRGC also runs laser eye-surgery clinics, makes cars, builds bridges and roads and is a developer of oil and gas fields.
Religious foundations
Welfare programs for the needy are managed by more than 30 public agencies alongside semi-state organizations known as bonyadBonyad
Bonyads are charitable trusts in Iran that play a significant role in Iran's non-petroleum economy, controlling an estimated 20% of Iran's GDP. Exempt from taxes, they have been called "bloated", and "a major weakness of Iran’s economy", and criticized for reaping "huge subsidies from government",...
s, together with several private non-governmental organizations. The bonyads are a consortium of over 120 organizations which are tax-exempt and in receipt of government subsidies and religious donations. They answer directly to the Supreme Leader of Iran
Supreme Leader of Iran
The Supreme Leader of Iran is the highest ranking political and religious authority in the Islamic Republic of Iran. The post was established by the constitution in accordance with the concept of Guardianship of the Islamic Jurists...
and control over 20% of Iran's GDP. Operating everything from vast soybean and cotton fields to hotels, soft drinks, auto-manufacturing and shipping lines, the bonyads are seen as overstaffed, corrupt, and generally not profitable. Bonyad companies also compete with Iran's unprotected private sector, whose firms complain of the difficulty of competing with bonyad firms whose political connections provide government permits and subsidies, which eliminate worries over the need to make a profit in many market sectors.
Labor and welfare
Experts believe that annual economic growth of above 5% is necessary to absorb the 750,000 new labor force entrants each year. Agriculture contributes just over 11% to the gross national product and employs one third of the labor force. As of 2004 the industrial sector, which includes miningMining in Iran
Mining in Iran is under-developed. Yet the country is one of the most important mineral producers in the world, ranked among 15 major mineral rich countries, holding some 68 types of minerals, 37 billion tonnes of proven reserves and more than 57 billion tonnes of potential reservoirs....
, manufacturing, and construction, contributed 42% of GDP and employed 31% of the labor force. Mineral products, notably petroleum
Ministry of Petroleum of Iran
The Ministry of Petroleum manages the oil industry, the producer of oil and petrochemical products. MoP is in charge of all issues pertaining to exploration, extraction, exploitation, distribution and exportation of crude oil and oil products. In addition, according to the "", issuing import...
, account for 80% of Iran’s export revenues, even though mining employs less than 1% of the country’s labor force. In 2004 the service sector ranked as the largest contributor to GDP (48%) and employed 44% of workforce. Women made up 33% of the labor force in 2005. Youth unemployment (aged 15-24) was 23% in 2008, resulting in significant brain drain
Iran's brain drain
According to the International Monetary Fund, the Islamic Republic of Iran ranks first in "brain drain" among 61 "developing" and "less developed" countries it measured....
.
Personal income
Iran is classed as a middle income country and has made significant progress in provision of health and education services in the period covered by the Millennium Development GoalsMillennium Development Goals
The Millennium Development Goals are eight international development goals that all 193 United Nations member states and at least 23 international organizations have agreed to achieve by the year 2015...
(MDGs). In 2010, Iran's average monthly income was about $500 (GNI per capita in 2009: $10,900 by PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
). There is a minimum national wage applicable to each sector of activity fixed by the Supreme Labor Council. In 2009 this was about $263 per month ($3,156 per year). The World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
reports that in 2001, approximately 20% of household consumption was spent on food, 32% on fuel, 12% on health care, and 8% on education.
The poverty line in Tehran
Tehran
Tehran , sometimes spelled Teheran, is the capital of Iran and Tehran Province. With an estimated population of 8,429,807; it is also Iran's largest urban area and city, one of the largest cities in Western Asia, and is the world's 19th largest city.In the 20th century, Tehran was subject to...
for the year ending March 20, 2008 was $9,612, while the national average poverty line was $4,932. In 2010, Iran's Department of Statistics announced that 10 million Iranians live under the absolute poverty line and 30 million live under the relative poverty line.
Social security
Although Iran does not possess universal social protection, in 1996, the Iranian Center for Statistics estimated that more than 73% of the Iranian population was covered by social security. Membership of the social security system for all employees is compulsory.Social security ensures employee protection against unemployment, disease, old age, and occupational accidents. In 2003, the government began consolidation of its welfare organizations in order to eliminate redundancy and inefficiency. In 2003 the minimum standard pension was 50% of the worker’s earnings but no less than the minimum wage. Iran spent 22.5% of its 2003 national budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
on social welfare programs of which more than 50% covered pension costs.
Employees between the age of 18 and 65 years are covered by the social security system with financing shared between the employee (7% of salary), the employer (20–23%) and the state, which in turn supplements the contribution of the employer up to a total value of 3%. Provision of social security is extended to self-employed workers, who voluntarily contribute between 12% and 18% of income depending on the protection sought. Civil servants, the regular military
Military of Iran
The Armed Forces of the Islamic Republic of Iran include the IRIA and the IRGC and the Police Force .These forces total about 545,000 active personnel . All branches of armed forces fall under the command of General Headquarters of Armed Forces...
, law enforcement agencies, and the Iranian Revolutionary Guard Corps all have their own pension systems.
Trade unions
Although Iranian workers have a theoretical right to form labor unions, in actuality there is no union system in the country. Ostensible worker representation is provide by the by the Workers' House, a state-sponsored institution that nevertheless attempts to challenge some state policies. GuildGuild
A guild is an association of craftsmen in a particular trade. The earliest types of guild were formed as confraternities of workers. They were organized in a manner something between a trade union, a cartel, and a secret society...
unions operate locally in most areas but are limited largely to issuing credentials and licenses. The right of workers to strike is generally not respected by the state. Since 1979 strikes have often been met by police action.
A comprehensive Iranian labor law covers all facets of labor relations, including hiring of local and foreign staff. This provides a broad and inclusive definition of the individuals it covers, with written, oral, temporary and indefinite employment contracts all recognized. Considered employee-friendly, the labor law makes it extremely difficult to lay off staff. Employing personnel on consecutive six-month contracts (a practice that is used to avoid paying benefits) is illegal, as is dismissing staff without proof of a serious offense. Labor disputes are settled by a special labor council, which usually rules in favor of the employee.
Agriculture and foodstuffs
Caspian Sea
The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the world's largest lake or a full-fledged sea. The sea has a surface area of and a volume of...
region and in the valleys of the northwest. Some northern and western areas support rain-fed agriculture, whilst others require irrigation for successful crop production.
Primitive farming methods, overworked and under-fertilized soil, poor seed and scarcity of water are the principal obstacles to agricultural production. About one third of total cultivated land is irrigated. Construction of multipurpose dams and reservoirs along rivers in the Zagros and Alborz
Alborz
Alborz , also written as Alburz, Elburz or Elborz, is a mountain range in northern Iran stretching from the borders of Azerbaijan and Armenia in the northwest to the southern end of the Caspian Sea, and ending in the east at the borders of Turkmenistan and Afghanistan...
mountains have increased the amount of water available for irrigation. Agricultural production is increasing as a result of modernization, mechanization, improvements to crops and livestock as well as land redistribution programs.
Wheat, the most important crop, is grown mainly in the west and northwest whilst rice is the major crop in the Caspian region. Other crops produced are barley, corn, cotton, sugar beets, tea, hemp, tobacco, fruits, potatoes, legumes (beans and lentils), vegetables, fodder plants (alfalfa and clover), almonds, walnuts and spices including cumin
Cumin
Cumin is a flowering plant in the family Apiaceae, native from the east Mediterranean to India. Its seeds are used in the cuisines of many different cultures, in both whole and ground form.-Etymology:...
and sumac
Sumac
Sumac is any one of approximately 250 species of flowering plants in the genus Rhus and related genera, in the family Anacardiaceae. Sumacs grow in subtropical and temperate regions throughout the world, especially in Africa and North America....
. Iran is also the world's largest producer of saffron
Saffron
Saffron is a spice derived from the flower of Crocus sativus, commonly known as the saffron crocus. Crocus is a genus in the family Iridaceae. Each saffron crocus grows to and bears up to four flowers, each with three vivid crimson stigmas, which are each the distal end of a carpel...
, pistachios, berberis
Berberis vulgaris
Berberis vulgaris /// is a shrub in the family Berberidaceae, native to central and southern Europe, northwest Africa and western Asia; it is also naturalised in northern Europe, including the British Isles and Scandinavia, and North America.It is a deciduous shrub growing up to 4 m high...
and berries as well as the second largest producer of dates. The country's meat and dairy products include lamb, goat meat, beef, poultry, milk, eggs, butter and cheese. Wool and leather are also produced whilst honey is collected from beehives and silk harvested from silkworm cocoons. Forestry products from the heavily wooded northern slopes of the Alborz Mountains are economically important although the cutting of trees is strictly controlled by the government, which also runs a reforestation
Reforestation
Reforestation is the natural or intentional restocking of existing forests and woodlands that have been depleted, usually through deforestation....
program. Rivers that drain into the Caspian Sea are fished for salmon, carp, trout, pike and sturgeon, from which caviar
Caviar
Caviar, sometimes called black caviar, is a luxury delicacy, consisting of processed, salted, non-fertilized sturgeon roe. The roe can be "fresh" or pasteurized, the latter having much less culinary and economic value....
is harvested to make Iran the world's largest producer.
Since the 1979 revolution commercial farming has replaced subsistence farming as the dominant mode of agricultural production. By 1997, the gross value of Iran's agricultural sector products reached $25 billion. Iran has attained 90% self-sufficiency in essential agricultural products, although rice production fails to meet domestic demand thereby making substantial imports necessary. In 2007 Iran reached self-sufficiency in wheat production and for the first time became a net wheat exporter. By 2003, a quarter of Iran's non-oil exports were of agricultural products. Major exports in this category include fresh and dried fruits, nuts, animal hides, processed foods, and spices.
Manufacturing
Large-scale factory based manufacturing began in the 1920s and has developed gradually. During the Iran–Iraq War, Iraq bombed many of Iran’s petrochemical plantsNational Iranian Petrochemical Company
The National Iranian Petrochemical Company , a subsidiary to the Iranian Petroleum Ministry, is owned by the government of the Islamic Republic of Iran. It is responsible for the development and operation of the country's petrochemical sector. Founded in 1964, NIPC began its activities by operating...
, damaging the large oil refinery at Abadan
Abadan Refinery
The Abadan refinery was located in Abadan near the coast of the Persian Gulf. It was completed in 1912 and was one of world's largest oil refineries when it was destroyed in 1980 by Iraq in the Iraq-Iran war. Its nationalisation in 1951 prompted the Abadan Crisis and ultimately the toppling of the...
where production came to a halt. Reconstruction of the refinery began in 1988 and production resumed in 1993. In spite of the war, many small factories sprang up to produce import-substitution goods and materials needed by the military
Military of Iran
The Armed Forces of the Islamic Republic of Iran include the IRIA and the IRGC and the Police Force .These forces total about 545,000 active personnel . All branches of armed forces fall under the command of General Headquarters of Armed Forces...
.
Iran's major manufactured products are petrochemicals, steel, and copper products. Other important manufactures include automobiles, home and electric appliances, telecommunications equipment, cement and industrial machinery. Iran has gradually become the largest operational base of industrial robots in West Asia. Other products include paper, rubber products, agricultural products, processed foods, leather products
Iranian leather industry
Iran’s modern leather industry began at the beginning of the 20th century. There are references of people trying to import leather processing machinery from the West during the reign of last Qajar king, Ahmad Shah Qajar...
and pharmaceuticals. In 2000, textile mills, using domestic cotton and wool such as Tehran Patou and Iran Termeh employed around 400,000 people around Tehran, Isfahan and along the Caspian coast.
According to The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
, Iran was ranked 39th in a list of industrialized nations, producing $23 billion of industrial products in 2008. Between 2008 to 2009 Iran leaped to 28th from 69th place in annual industrial production growth.
A 2003 report by the United Nations Industrial Development Organization
United Nations Industrial Development Organization
The United Nations Industrial Development Organization , French/Spanish acronym ONUDI, is a specialized agency in the United Nations system, headquartered in Vienna, Austria...
regarding small and medium sized enterprises (SMEs) in Iran identified the following impediments to industrial development:
- Lack of monitoring institutions;
- An inefficient banking system;
- Insufficient research & development;
- A shortage of managerial skills;
- CorruptionCorruption in IranThe Islamic Republic of Iran suffers from widespread corruption.- Corruption levels :According to Transparency International, which publishes the annual Corruption Perception Index, in 2009 Iran fell from 141st on the list of 180 countries to eighth from bottom – one of the most marked...
; - Inefficient taxation;
- Socio-cultural apprehensions;
- The absence of social learning loopsEducation in IranEducation in Iran is highly centralized and is divided to K-12 education and higher education. K-12 education is supervised by the Ministry of Education and higher education is under supervision of Ministry of Science and Technology....
; - Shortcomings in international market awareness necessary for global competitionGlobal Competitiveness ReportThe Global Competitiveness Report is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2011–2012 report covers 142 major and emerging economies....
, - Cumbersome bureaucratic procedures;
- A shortage of skilled labor;
- Lack of intellectual property protectionIntellectual property in IranIran is a member of the WIPO since 2001 and has acceded to several WIPO intellectual-property treaties. Iran joined the Convention for the Protection of Industrial Property in 1959. In December 2003 Iran became a party to the Madrid Agreement and the Madrid Protocol for the International...
; - Inadequate social capital, social responsibility and socio-cultural valuesCulture of IranTo best understand Iran, Afghanistan, their related societies and their people, one must first attempt to acquire an understanding of their culture. It is in the study of this area where the Persian identity optimally expresses itself...
.
Despite these problems, recent studies reveal that over the past few years Iran has progressed rapidly in various scientific and technological fields
Science and technology in Iran
Persia was a cradle of science in earlier times. Persian scientists contributed to the current understanding of nature, medicine, mathematics, and philosophy. Persians made important contributions to algebra and chemistry, invented the wind-power machine, and the first distillation of alcohol...
. Major advancements have taken place in the petrochemical
National Iranian Petrochemical Company
The National Iranian Petrochemical Company , a subsidiary to the Iranian Petroleum Ministry, is owned by the government of the Islamic Republic of Iran. It is responsible for the development and operation of the country's petrochemical sector. Founded in 1964, NIPC began its activities by operating...
, pharmaceutical, aerospace
Iranian Space Agency
The Iranian Space Agency is Iran's governmental space agency. Iran is an active participant in the Asian space race and became an orbital-launch-capable nation in 2009...
, defense, and heavy industry
Industry of Iran
According to a report by the Economist, Iran has been ranked 39th for producing $23 billion of industrial products in 2008. From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate. A recent report by the World Fact Book ranks Iran 3rd among...
sectors. Even in the face of U.S. economic sanctions, Iran appears to be emerging as an industrialized country.
Handicrafts
Iran has a long tradition of producing artisan goodsIranian art
Persian arts, or Iranian arts is one of the richest art heritages in world history and encompasses many disciplines including architecture, painting, weaving, pottery, calligraphy, metalworking and stonemasonry.-The Persian rug:...
including Persian carpets, ceramics, copperware and brassware, glass, leather goods, textiles, and wooden artifacts. The country's rich carpet-weaving tradition dates from pre-Islamic times and remains an important industry contributing substantial amounts to rural incomes. An estimated 1.2 million weavers in Iran produce carpets for both domestic and international export markets .
More than $500 million worth of hand-woven carpets are exported each year, accounting for 30% of the 2008 world market . Around 5.2 million people work in some 250 fields of the handicraft industry and contribute 3% of GDP.
Automobile manufacturing
As of 2001, there were 13 public and privately owned automakers within Iran, of which Iran KhodroIran Khodro
Iran Khodro Company, also known as IKCO, is the leading Iranian automaker with headquarters in Tehran. The company's original name was Iran National. IKCO was founded in 1962 and it produced 688,000 passenger cars in 2009...
and Saipa
SAIPA
Saipa is the second largest Iranian auto manufacturer.Saipa was established in 1966, with 75% Iranian ownership, to assemble Citroëns under license for the Iranian market...
accounted for 94% of total domestic production. Iran Khodro's Paykan
Paykan
]The Paykan was an automobile produced by the Iranian company Iran Khodro Industrial Group. The car was very popular in Iran from the late 1960s to the late 1990s...
, replaced by the Samand
Samand
Samand is an Iranian car brand manufactured by Iran Khodro using local manufacturers for its parts.In Persian, Samand is the name for a breed of fast horse. Samand trade name is now registered at the World Intellectual Property Organization. Its selling price starts at $14,500 in Turkey.The Samand...
in 2005, is the predominant car brand in the country. With 61% of the market in 2001, Iran Khodro was the largest player, whilst Saipa contributed 33% of Iran’s total production in the same year. Other car manufacturers, such as the Bahman Group
Bahman Group
Bahman Group is a Tehran, Iran-based manufacturer of vehicles under license by Mazda. Founded in 1952 by Mr. Amanollah Sarbaz and his son, they have since then manufactured, under license, versions of Mazda's trucks. Today they manufacture versions of the Mazda B-Series pickups and the previous...
, Kerman Motors, Kish Khodro
Kish Khodro
Kish Khodro is a car company based in Kish, Iran. Established in 1998, 40% of the company is owned by the Iranian State Bank. Their original model was the plastic-bodied Sinad I hatchback, which was built by Mohammad Saffari Kermani. This was followed by the differently styled Sinad II and the...
, Raniran, Traktorsazi, Shahab Khodro and others accounted for 6% of the total market. These automakers produce a wide range of automobiles including motorbikes, passenger cars such as Saipa's Tiba
Saipa Miniator
Tiba is an Iranian car made by Saipa. The car was originally named "Miniator", based on the "S81" platform.In November 2008 Saipa launched the Iran-made "Saipa National Engine 231". In December 2008, Saipa unveiled its new model: "Miniator"...
, vans, mini trucks, medium sized trucks, heavy duty trucks, minibuses, large size buses and other heavy automobiles used for commercial and private activities in the country. In 2009 Iran ranked fifth in car production growth standing next to China, Taiwan, Romania and India. Iran ranked the world's 12th biggest automaker in 2010 and has a fleet of 11.5 million cars. Iran had a total production of 1,395,421 cars in 2010, including 35,901 commercial vehicles.
Defense industry
In 2007 the International Institute for Strategic StudiesInternational Institute for Strategic Studies
The International Institute for Strategic Studies is a British research institute in the area of international affairs. It describes itself as "the world’s leading authority on political-military conflict"...
estimated Iran's defense budget at $7.31 billion, equivalent to 2.6% of GDP or $102 per capita, ranking it 25th in global defense expenditure. The country's defense industry has advanced in the past 25 years and now manufactures many types of arms and equipment. Since 1992, Iran's Defense Industries Organization (DIO)
Defense Industries Organization
The Defense Industries Organization The Defense Industries Organization The Defense Industries Organization (DIO; Persian: Sasadjah (Sazemane Sanaye Defa) is a conglomerate of companies run by the Islamic Republic of Iran whose function is to provide the military of Iran with the necessary...
has produced its own tanks, armored personnel carriers, guided missiles, radar systems, a guided missile destroyer, military vessels, submarines, and a fighter plane. In 2006 Iran exported weapons to 57 countries, including NATO members, and sold $100 million worth of military equipment abroad.
Construction and real estate
Until the early 1950s Iran's construction industry remained largely in the hands of small domestic companies. Increased income from oil and gas and the availability of easy credit triggered a subsequent building boom that attracted major international construction firms to the country. This growth continued until the mid-1970s when a sharp rise in inflation and a credit squeeze caused the boom to collapse. The construction industry had revived somewhat by the mid-1980s, although housing shortages and speculation have remain serious problems, especially in large urban centers. As of January 2011, the banking sector, particularly Bank MaskanBank Maskan
Bank Maskan , also known as the Housing Bank, is a bank in Iran. In 2008, the Central Bank banned all banks and other financial institutions, except for Maskan Bank, from providing residential mortgages.-Structure:Their subsidiaries include:...
, has given loans up to 102 trillion rials ($10.2 billion) to applicants of Mehr housing scheme. Construction is one of the most important sectors in Iran accounting for 20–50% of total private investment in urban areas and one of the prime investment targets of well off Iranians.
Annual turnover in the construction industry amounted to $38.4 billion in 2005 and $32.8 billion in 2011. Seventy percent of Iranians own their own homes. Because of poor construction quality, many buildings stand in need of anti-seismic reinforcement or renovation. Iran also has a large dam building industry.
Mines and metals
Mineral production contributed only 0.6% of the country’s GDP in 2011, a figure that increases to 4% when other mining-related industries are included. Factors including lack of suitable infrastructure, legal barriers, exploration difficulties, and government control over all resources account for such low figures.Although the petroleum industry provides the majority of revenue, about 75% of all mining sector employees work in mines producing minerals other than oil and natural gas. These include coal, iron ore, copper, lead, zinc, chromium, barite
Barite
Baryte, or barite, is a mineral consisting of barium sulfate. The baryte group consists of baryte, celestine, anglesite and anhydrite. Baryte itself is generally white or colorless, and is the main source of barium...
, salt, gypsum
Gypsum
Gypsum is a very soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4·2H2O. It is found in alabaster, a decorative stone used in Ancient Egypt. It is the second softest mineral on the Mohs Hardness Scale...
, molybdenum
Molybdenum
Molybdenum , is a Group 6 chemical element with the symbol Mo and atomic number 42. The name is from Neo-Latin Molybdaenum, from Ancient Greek , meaning lead, itself proposed as a loanword from Anatolian Luvian and Lydian languages, since its ores were confused with lead ores...
, strontium
Strontium
Strontium is a chemical element with the symbol Sr and the atomic number 38. An alkaline earth metal, strontium is a soft silver-white or yellowish metallic element that is highly reactive chemically. The metal turns yellow when exposed to air. It occurs naturally in the minerals celestine and...
, silica, uranium, and gold, the latter of which is a mainly a by-product of the Sar Cheshmeh
Sar Cheshmeh
Sarcheshmeh is a large open cast copper mine in the Kerman Province of Iran, considered to be the second largest copper deposit worldwide. Also containing substantial amounts of molybdenum, gold and other rare metals....
copper complex operation. The mine at Sar Cheshmeh in Kerman Province is home to the world's second largest lode of copper ore.
Large iron ore deposits exist in central Iran, near Bafq, Yazd
Yazd
Yazd is the capital of Yazd Province in Iran, and a centre of Zoroastrian culture. The city is located some 175 miles southeast of Isfahan. At the 2006 census, the population was 423,006, in 114,716 families....
, and Kerman. The government owns 90% of all mines and related large industries in Iran and is seeking foreign investment to development of the mining sector. The sector accounts for 3% of the country’s exports.
Iran has recoverable coal reserves of nearly 1.9 billion short ton
Short ton
The short ton is a unit of mass equal to . In the United States it is often called simply ton without distinguishing it from the metric ton or the long ton ; rather, the other two are specifically noted. There are, however, some U.S...
nes. By mid-2008, the country produced about 1.3 million short tonnes of coal annually and consumed about 1.5 million short tonnes, making it a small net importer of coal. The country plans to increase hard-coal production to 5 million tons in 2012 from 2 million tons in November 2008. Main steel mills are located in Isfahan and Khuzestan. Iran became self-sufficient in steel production in 2009. Aluminum and copper production are projected to hit 245,000 and 383,000 tons respectively by March 2009. Cement production reached 65 million tons in 2009, while Iran exports this item to 40 countries.
Energy, gas, petroleum and petrochemicals
Iran possesses 10% of the world's proven oil reserves and 15% of its gas reserves. Domestic oil and gas along with hydroelectric power facilities provide the country with power. Energy wastage in IranEnergy in Iran
Energy resources in Iran consist of the third largest oil reserves and the second largest natural gas reserves in the world. Iran is in a constant battle to use its energy resources more effectively in the face of subsidization and the need for technological advances in energy exploration and...
amounts to six or seven billion dollars per year, whilst energy consumption is much higher than the international norm. Iran recycles 28% of its used oil and gas, whereas some other countries reprocess up to 60%. In 2008 Iran paid out $84 billion in subsidies for oil, gas and electricity. It is the third largest consumer of natural gas in the world after United States and Russia. In 2010 Iran completed its first nuclear power plant at Bushehr
Bushehr Nuclear Power Plant
The Bushehr Nuclear Power Plant is a nuclear power plant in Iran southeast of the city of Bushehr, between the fishing villages of Halileh and Bandargeh along the Persian Gulf. The plant is located at the junction of three tectonic plates....
with Russian assistance.
Iran has been a major oil exporter since 1913. The country's major oil fields lie in the central and southwestern parts of the western Zagros mountains. Oil is also found in northern Iran and in the offshore waters of the Persian Gulf. In 1978, Iran ranked as the world's fourth largest oil producer, OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
's second largest oil producer and second largest oil exporter. Following the 1979 revolution the new government reduced daily oil production in accordance with its oil conservation policy. A further decline in production occurred as result of damage to oil facilities during the Iraq-Iran war. Oil production rose in the late 1980s as pipelines were repaired and newly discovered oil fields in the Persian Gulf exploited. By 2004, Iran’s annual oil production reached 1.4 billion barrels producing a net profit of $50 billion. Officials in Iran estimate that Iran's annual oil and gas revenues could reach $250 billion by 2015 once current projects come on stream. Iran manufactures 60–70% of its industrial equipment domestically, including refineries, oil tankers, drilling rigs, offshore platforms and exploration instruments.
Major refineries
National Iranian Oil Refining and Distribution Company
National Iranian Oil Refining and Distribution Company is part of the Ministry of Petroleum of Iran. NIORDC was established on March 8, 1992 and undertook to perform all operations relating to refining and distribution of oil products....
located at Abadan (site of the country's first refinery), Kermanshah, and Tehran failed to meet domestic demand for gasoline in 2009. Iran's refining industry requires $15 billion in investment over the period 2007–2012 to become self-sufficient and end imports. Pipelines move oil from the fields to the refineries
Oil refinery
An oil refinery or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas...
and to such exporting ports as Abadan, Bandar-e Mashur, and Kharg Island
Kharg Island
Kharg Island is a continental island in the Persian Gulf belonging to Iran. The island is located off the coast of Iran and northwest of the Strait of Hormuz. Administered by the adjacent coastal Bushehr Province, Kharg Island provides a sea port for the export of oil and extends Iranian...
. Since 1997, Iran's state-owned oil and gas industry
Petroleum industry in Iran
In 2004 Iran produced 5.1 percent of the world’s total crude oil , which generated revenues of US$25 billion to US$30 billion and was the country’s primary source of foreign currency. At 2006 levels of production, oil proceeds represented about 18.7 percent of gross domestic product . However, the...
has entered into major exploration and production agreements with foreign consortia. In 2008 the Iranian Oil Bourse
Iranian oil bourse
The Iranian Oil Bourse International Oil Bourse, Iran Petroleum Exchange Kish Exchange or Oil Bourse in Kish is a commodity exchange which opened on February 17, 2008. It was created by cooperation between Iranian ministries, the Iran Mercantile Exchange and other state and private institutions...
(IOB) was inaugurated in Kish Island. The IOB is intended as an oil bourse for petroleum, petrochemicals and gas in various currencies. Trading is primarily in the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
and Iranian rial
Iranian rial
The rial is the currency of Iran. It is subdivided into 100 dinar but, because of the very low current value of the rial, no fraction of the rial is used in accounting....
along with a basket of other major currencies, excluding the US dollar. Thanks to a fertilizer plant in Shiraz
Shiraz
Shiraz may refer to:* Shiraz, Iran, a city in Iran* Shiraz County, an administrative subdivision of Iran* Vosketap, Armenia, formerly called ShirazPeople:* Hovhannes Shiraz, Armenian poet* Ara Shiraz, Armenian sculptor...
, the largest ethylene unit in the world, in Asalouyeh
Asalouyeh
Asaluyeh is a city in and the capital of Asaluyeh District, in Kangan County, Bushehr Province, Iran. At the 2006 census, its population was 4,746, in 875 families....
, and the completion of many other special economic zone projects, Iran's exports in petrochemicals reached $5.5 billion in 2007, $9 billion in 2008 and $7.6 billion during the first ten months of the Iranian calendar year 2010. According to Iran's Petroleum Ministry, Iran plans to invest $500 billion in its oil sector
Petroleum industry in Iran
In 2004 Iran produced 5.1 percent of the world’s total crude oil , which generated revenues of US$25 billion to US$30 billion and was the country’s primary source of foreign currency. At 2006 levels of production, oil proceeds represented about 18.7 percent of gross domestic product . However, the...
until 2025.
Services
Despite efforts in the 1990s towards economic liberalization, government spending, including expenditure by quasi-governmental foundations, remains high. Estimates of service sector spending in Iran are regularly more than two-fifths of the GDP, much of which is government-related, including military expenditures, government salaries, and social security disbursements.Urbanization has contributed to significant growth in the service sector. Important service industries include public services (including education), commerce, personal services, professional services, and tourism. Iran's national science budget in 2005 was about $900 million, roughly equivalent to the 1990 figure. By early 2000, Iran allocated around 0.4% of its GDP to research and development, ranking the country "far behind industrialized societies" and the world average of 1.4%.
The total value of transport and communications GDP is expected to rise to $46 billion in nominal terms by 2013, representing 6.8% of Iran’s GDP. Projections based on employment figures compiled for the International Labor Organization in 1996 suggest that Iran’s transport and communications sector employed 3.4 million people, or 20.5% of the labor force in 2008.
Retail and distribution
Iran's retail industry consists largely of cooperatives (many of them government-sponsoredBonyad
Bonyads are charitable trusts in Iran that play a significant role in Iran's non-petroleum economy, controlling an estimated 20% of Iran's GDP. Exempt from taxes, they have been called "bloated", and "a major weakness of Iran’s economy", and criticized for reaping "huge subsidies from government",...
), and independent retailers operating in bazaar
Bazaar
A bazaar , Cypriot Greek: pantopoula) is a permanent merchandising area, marketplace, or street of shops where goods and services are exchanged or sold. The term is sometimes also used to refer to the "network of merchants, bankers and craftsmen" who work that area...
s. The bulk of food sales occur at street markets with prices set by the Chief Statistics Bureau. Iran has 438,478 small grocery retailers. These are especially popular in cities other than Tehran where the number of hypermarkets and supermarkets is still very limited. More mini-markets and supermarkets are emerging, but these are mostly one-off, independently owned operations. The biggest chainstores are state-owned Etka, Refah, Shahrvand
Shahrvand Chain Stores Inc.
Shahrvand Supermarkets is an Iranian supermarket chain based in Tehran. The establishment has currently 25 branches across in Tehran.Shahrvand, along with Refah supermarket, and Carrefour-owned Hyperstar Market, create the bulk of the Iranian relail industry....
and Hyperstar Market
Carrefour
Carrefour S.A. is an international hypermarket chain headquartered in Levallois-Perret, France. It is one of the largest hypermarket chains in the world...
. Electronic commerce in Iran passed the $1 billion mark in 2009.
Healthcare and pharma
| IRAN: Healthcare (Source: Economist Intelligence Unit Economist Intelligence Unit The Economist Intelligence Unit is part of the Economist Group.It is a research and advisory company providing country, industry and management analysis worldwide and incorporates the former Business International Corporation, a U.S. company acquired by the parent organization in 1986... ) |
2005 | 2006 | 2007 |
|---|---|---|---|
| Life expectancy, average (years) | 70.0 | 70.3 | 70.6 |
| Healthcare spending (% of GDP) | 4.2 | 4.2 | 4.2 |
| Healthcare spending ($ per head) | 113 | 132 | 150 |
The constitution entitles Iranians to basic health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
. By 2008, 73% of all Iranians were covered by the voluntary national health insurance system. Although over 85% of the population use an insurance system to reimburse their drug expenses, the government heavily subsidizes pharmaceutical production/importation in order to increase affordability of medicines and vaccines. The total market value of Iran’s health and medical sector
Health care in Iran
Health care in Iran and medical sector's market value was almost US $24 billion in 2002 and was forecast to rise to US $31 billion by 2007. With a population of almost 70 million, Iran is one of the most populous countries in the Middle East...
was $24 billion in 2002 and was forecast to rise to $50 billion by 2013, reflecting the increasing demand on medical services. In 2006, 55 pharmaceutical companies in Iran produced 96% (quantitatively) of the medicines for a market worth $1.2 billion. This figure is projected to increase to $3.65 billion by 2013.
Tourism and travel
Although tourism declined significantly during the war with Iraq in the 1980s it has subsequently recovered. About 1,659,000 foreign tourists visited Iran in 2004 and 2.3 million in 2009 with most arrivals from Asian countries, including the republics of Central AsiaCentral Asia
Central Asia is a core region of the Asian continent from the Caspian Sea in the west, China in the east, Afghanistan in the south, and Russia in the north...
, while a small percentage of tourists (about 10%) came from the countries of the European Union and North America.
The most popular tourist destinations are Isfahan, Mashhad
Mashhad
Mashhad , is the second largest city in Iran and one of the holiest cities in the Shia Muslim world. It is also the only major Iranian city with an Arabic name. It is located east of Tehran, at the center of the Razavi Khorasan Province close to the borders of Afghanistan and Turkmenistan. Its...
, and Shiraz
Shiraz
Shiraz may refer to:* Shiraz, Iran, a city in Iran* Shiraz County, an administrative subdivision of Iran* Vosketap, Armenia, formerly called ShirazPeople:* Hovhannes Shiraz, Armenian poet* Ara Shiraz, Armenian sculptor...
. In the early 2000s the industry still faced serious limitations in infrastructure, communications, industry standards, and personnel training. The majority of the 300,000 tourist visas granted in 2003 were obtained by Asian Muslims, who presumably intended to visit important pilgrimage
Pilgrimage
A pilgrimage is a journey or search of great moral or spiritual significance. Typically, it is a journey to a shrine or other location of importance to a person's beliefs and faith...
sites in Mashhad
Mashhad
Mashhad , is the second largest city in Iran and one of the holiest cities in the Shia Muslim world. It is also the only major Iranian city with an Arabic name. It is located east of Tehran, at the center of the Razavi Khorasan Province close to the borders of Afghanistan and Turkmenistan. Its...
and Qom
Qom
Qom is a city in Iran. It lies by road southwest of Tehran and is the capital of Qom Province. At the 2006 census, its population was 957,496, in 241,827 families. It is situated on the banks of the Qom River....
. Several organized tours from Germany, France, and other European countries come to Iran annually to visit archaeological sites and monuments. In 2003 Iran ranked 68th in tourism revenues worldwide. According to UNESCO
UNESCO
The United Nations Educational, Scientific and Cultural Organization is a specialized agency of the United Nations...
and the deputy head of research for Iran Travel and Tourism Organization (ITTO), Iran is rated among the "10 most touristic countries in the world".
Banking, finance and insurance
Government loans and credits are available to industrial and agricultural projects, primarily through banks. Iran’s unit of currency is the rialIranian rial
The rial is the currency of Iran. It is subdivided into 100 dinar but, because of the very low current value of the rial, no fraction of the rial is used in accounting....
which had an average official exchange rate of 9,326 rials to the U.S. dollar in 2007. Rials are also exchanged on the unofficial market at a higher rate. In 1979, the government nationalized all private banks. A banking system was subsequently created where, in accordance with Islamic law
Islamic banking
Islamic banking is banking or banking activity that is consistent with the principles of Islamic law and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for loans of money...
, interest on loans was replaced with handling fees. This system went into effect in the mid-1980s. In 2008 Iranian reserves in foreign banks reached $81 billion.
The banking system consists of a central bank, the Bank Markazi, which issues currency and oversees all state and private banks. Several commercial banks headquartered in Tehran have branches throughout the country. There are also two development banks and a housing bank that specializes in home mortgages. The government began to privatize the banking sector in 2001 when licenses were issued to two new privately owned banks.
The accounts of the state-owned commercial banks are dominated by loans to the state, bonyad
Bonyad
Bonyads are charitable trusts in Iran that play a significant role in Iran's non-petroleum economy, controlling an estimated 20% of Iran's GDP. Exempt from taxes, they have been called "bloated", and "a major weakness of Iran’s economy", and criticized for reaping "huge subsidies from government",...
enterprises, large-scale private firms and four thousand wealthy or connected individuals who do not always repay their loans. While most Iranians have difficulties obtaining small home loans, 90 persons have managed to secure collective facilities totaling $8 billion from banks. In 2009, GIO
General Inspection Office (Iran)
The General Inspection Office of Iran is linked to the Judiciary of Iran. It is also called the State Inspectorate Organization of Iran....
informed that Iranian banks have some $38 billion of delinquent loans, while they are only capitalized at $20 billion.
As of 2010, the Tehran Stock Exchange
Tehran Stock Exchange
The Tehran Stock Exchange is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. As of July 2010, 337 companies with a market capitalization of US$72 billion were listed on TSE...
trades the shares of more than 330 registered companies. The stock market capitalization of listed companies in Iran was valued at $100 billion in 2011. According to experts, Iran offers many investment opportunities, particularly on its Tehran Stock Exchange. In 2010, Iran attracted almost $11.9 billion from abroad, of which $3.6 billion was FDI
Foreign Direct Investment in Iran
Foreign direct investment in Iran has been hindered by unfavorable or complex operating requirements and by international sanctions, although in the early 2000s the Iranian government liberalized investment regulations. Iran ranks 62nd in the World Economic Forum's 2011 analysis of the global...
, $7.4 billion was from international commercial bank loans, and around $900 million consisted of loans and projects from international development banks.
Insurance premiums accounted for just under 1% of GDP in 2008, a figure partly attributable to low average income per head. Five state-owned insurance firms dominate the market, four of which are active in commercial insurance. The leading player is the Iran Insurance Company, followed by Asia, Alborz and Dana insurances. In 2001/02 third-party liability insurance accounted for 46% of premiums, followed by health insurance (13%), fire insurance (10%) and life insurance (9.9%).
Communications, electronics and IT
Iranian blogs
Blogging in Iran operates under special circumstances because the government restricts certain views. Blogs in general tend to be unregulated compared to other forms of expression in Iranian society. This characteristic can account for the huge popularity of blogs especially among Iranian youths...
(2010). In 1998 the Ministry of Post, Telegraph & Telephone (later renamed the Ministry of Information & Communication Technology
Ministry of Information and Communications Technology (Iran)
The Ministry of Information and Communication Technology established in 1908, is the Ministry of Information and Communication of the Islamic Republic of Iran...
) began selling Internet accounts to the general public. In 2006, revenues from the Iranian telecom industry were estimated at $1.2 billion. In 2006 Iran had 1,223 Internet Service Providers (ISPs), all private sector operated.
According to the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, Iran's information and communications technology sector had a 1.4% share of GDP in 2008. Around 150,000 people are employed in this sector, including 20,000 in the software industry. There were 1,200 registered IT companies in 2002, 200 of which were involved in software development. In 2008 software exports stood at $50 million. By the end of 2009, Iran's telecom market was the fourth-largest market in the Middle East at $9.2 billion and is expected to grow to $12.9 billion by 2014 at a compound annual growth rate (CAGR) of 6.9%.
Transport
Iran has an extensive paved road system linking most of its towns and all of its cities. In 2007 the country had 178152 kilometres (110,698.8 mi) of roads, of which 66% were paved. The same year there were approximately 100 passenger cars for every 1,000 inhabitants whilst trains operated on 11106 kilometres (6,901 mi) of track.The country’s major port of entry is Bandar-Abbas on the Strait of Hormuz
Strait of Hormuz
The Strait of Hormuz is a narrow, strategically important waterway between the Gulf of Oman in the southeast and the Persian Gulf. On the north coast is Iran and on the south coast is the United Arab Emirates and Musandam, an exclave of Oman....
. After arriving in Iran, imported goods are distributed throughout the country by trucks and freight trains. The Tehran–Bandar-Abbas railroad, opened in 1995, connects Bandar-Abbas to the railroad system of Central Asia via Tehran and Mashhad
Mashhad
Mashhad , is the second largest city in Iran and one of the holiest cities in the Shia Muslim world. It is also the only major Iranian city with an Arabic name. It is located east of Tehran, at the center of the Razavi Khorasan Province close to the borders of Afghanistan and Turkmenistan. Its...
. Other major ports include Bandar Anzali and Bandar Torkaman
Bandar Torkaman
Bandar Torkaman is a city in and capital of Torkaman County, Golestan Province, Iran. At the 2006 census its population was 45,045, in 9,755 families.Bandar Torkaman is a port on the Caspian Sea. It is approximately from Tehran...
on the Caspian Sea and Khoramshahr and Bandar Imam Khomeini
Bandar Imam
Bandar-e Emam Khomeyni is a city in and the capital of Bandar-e Emam Khomeyni District of Mahshahr County, Khuzestan Province, Iran. At the 2006 census, its population was 67,078, in 14,681 families....
on the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
. Dozens of cities have airports serving passenger and cargo planes. Iran Air
Iran Air
Iran Air , formally Airline of the Islamic Republic of Iran is the flag carrier airline of Iran, operating services to 60 destinations, 35 international and 25 domestic. The cargo fleet operates services to 20 scheduled and 5 charter destinations...
, the national airline, was founded in 1962 and operates domestic and international flights. All large cities have mass transit systems using buses whilst several private companies provide bus services between cities. Tehran, Mashhad, Shiraz
Shiraz
Shiraz may refer to:* Shiraz, Iran, a city in Iran* Shiraz County, an administrative subdivision of Iran* Vosketap, Armenia, formerly called ShirazPeople:* Hovhannes Shiraz, Armenian poet* Ara Shiraz, Armenian sculptor...
, Tabriz
Tabriz
Tabriz is the fourth largest city and one of the historical capitals of Iran and the capital of East Azerbaijan Province. Situated at an altitude of 1,350 meters at the junction of the Quri River and Aji River, it was the second largest city in Iran until the late 1960s, one of its former...
, Ahvaz
Ahvaz
-History:For a more comprehensive historical treatment of the area, see the history section of Khūzestān Province.-Ancient history:Ahvaz is the anagram of "Avaz" and "Avaja" which appear in Darius's epigraph...
and Isfahan are in the process of constructing underground railways. More than one million people work in the transportation sector, accounting for 9% of 2008 GDP.
Foreign trade and economic relations
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
and the Organization of Gas Exporting Countries. Petroleum constitutes 80% of Iran's exports with a value of $46.9 billion in 2006. Iran's non-oil exports stood at $16.3 billion in 2007, a rise of 47.2% over the previous year, and $25 billion in 2010. Pistachios, liquefied propane, methanol (methyl alcohol), hand-woven carpets and automobiles are the core items of Iran's non-oil exports. Iran's exports of technical and engineering services in 2007–08 were $2.7 billion of which 40% of technical services pertained to Central Asia and the Caucasus, 30% ($350 million) to Iraq, and close to 20% ($205 million) to Africa.
Iranian firms have implemented projects in different fields such as energy, pipelines, irrigation, dam construction and power generation in different countries. The country has made the development of non-oil exports a priority and has the advantage of a broad domestic industrial base, an educated and motivated workforce as well as a favorable location, which gives it access to an estimated population of some 300 million people in Caspian
Caspian Sea
The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the world's largest lake or a full-fledged sea. The sea has a surface area of and a volume of...
markets, Persian Gulf states and some ECO countries
Economic Cooperation Organization
The Economic Cooperation Organization is an intergovernmental organization involving seven Asian and three Eurasian nations, part of the South-central Asian Union. It provides a platform to discuss ways to improve development and promote trade, and investment opportunities. The ECO is an ad hoc...
further east.
The total volume of imports to Iran rose by 189% from $13.7 billion in 2000 to $39.7 billion in 2005. and $55.189 billion in 2009. Iran is among the few countries that has maintained positive GDP growth despite the 2008 global financial crisis. Iran's major commercial partners are China
People's Republic of China – Iran relations
People's Republic of China – Islamic Republic of Iran relations refers to the economic, political, and social relations between the modern nations of the People's Republic of China and Iran, from the 1950s to the present day...
, India, Germany
Iran-Germany relations
German–Iranian relations refer to bilateral relationis between Germany and Iran. Official diplomatic relations between Iran and post war Germany began in 1952 when Iran opened its first mission office in Bonn...
, South Korea, Japan, France
Iran-France relations
France–Iran relations are the international relations between France and Iran. Iran has generally enjoyed a friendly relationship with France since the Middle Ages...
, Russia
Iran-Russia relations
Relations between Russia and Persia , officially commenced in 1592, with the Safavids in power. Past and present contact between Russia and Iran has long been complicatedly multi-faceted; often wavering between collaboration and rivalry. The two nations have a long history of geographic, economic,...
and Italy
Iran-Italy relations
Iran–Italy relations refers to the diplomatic relations between the Islamic Republic of Iran and the Italian Republic.-Classical era:Sassanid Persia had intense, often adversarial relations with Rome and Byzantium in antiquity...
. From 1950 until 1978, the United States
United States-Iran relations
Political relations between Iran and the United States began in the mid-to-late 19th century. Initially, while Iran was very wary of British and Russian colonial interests during the Great Game, the United States was seen as a more trustworthy Western power, and the Americans Arthur Millspaugh and...
was Iran's foremost economic and military partner, playing a major role in the modernization of its infrastructure and industry.
Since the mid 90's, Iran has increased its economic cooperation with other developing countries
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
in "south-south integration
South-South Cooperation
South-South Cooperation is a term historically used by policymakers and academics to describe the exchange of resources, technology, and knowledge between developing countries, also known as countries of the global South.- History :...
" including Syria, India, China, South Africa, Cuba and Venezuela. Iran's trade with India passed the $13 billion mark in 2007, an 80% increase in trade volume within a year. Iran is expanding its trade ties with Turkey and Pakistan
Iran-Pakistan relations
Relations between Pakistan and Iran date back to the common prehistoric Indo-Iranian heritage from 3000-2000 BC and the Indo-Parthian and Indo-Scythian kingdoms of antiquity to the strongly Persianized Islamic empires in South-central Asia and the Greater Middle East in the 13th to 19th...
and shares with its partners the common objective to create the ECO
Economic Cooperation Organization
The Economic Cooperation Organization is an intergovernmental organization involving seven Asian and three Eurasian nations, part of the South-central Asian Union. It provides a platform to discuss ways to improve development and promote trade, and investment opportunities. The ECO is an ad hoc...
, a single economic market in West and Central Asia.
Since 2003, Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
has increased investment in the economic development and reconstruction of neighboring countries such as Iraq and Afghanistan. In Dubai, UAE, it is estimated that Iranian expatriates
Iranian citizens abroad
The term Iranians abroad or Iranian diaspora refers to the Iranian people born in Iran but living outside of Iran with their children.As of 2010, there are an estimated four to five million Iranians living abroad, mostly in North America, Europe, Persian Gulf States, Turkey, Australia and the...
handle over 20% of its domestic economy and account for an equal proportion of its population. Migrant Iranian workers abroad remitted less than $2 billion home in 2006. Between 2005 and 2009, trade between Dubai and Iran tripled to $12 billion; money invested in the local real estate market and import-export businesses, collectively known as the Bazaar
Bazaar
A bazaar , Cypriot Greek: pantopoula) is a permanent merchandising area, marketplace, or street of shops where goods and services are exchanged or sold. The term is sometimes also used to refer to the "network of merchants, bankers and craftsmen" who work that area...
, and geared towards providing Iran and other countries with required consumer goods. It is estimated that one third of Iran's imported goods and exports are delivered through the black market, underground economy, and illegal jetties.
Foreign direct investment
In the 1990s and early 2000s, some indirect oilfield development agreements were made with foreign firms, including buyback contracts in the oil sector whereby the contractor provided project finance then received remuneration from the National Iranian Oil CompanyNational Iranian Oil Company
The National Iranian Oil Company , a government-owned corporation under the direction of the Ministry of Petroleum of Iran, is an oil and natural gas producer and distributor headquartered in Tehran. It was established in 1948...
(NIOC) in the form of an allocated production share. Operation of the field was then transferred to NIOC after a set number of years, thereby completing the contract.
Unfavorable or complex operating requirements and international sanctions
Sanctions against Iran
This article outlines economic, trade, scientific and military sanctions against Iran, which have been imposed by the U.S. government, or under U.S. pressure by the international community through the United Nations Security Council...
have hindered foreign investment in the country, despite liberalization of relevant regulations by the Iranian government in the early 2000s. Iran absorbed $24.3 billion of foreign investment between the Iranian calendar
Iranian calendar
The Iranian calendars or sometimes called Persian calendars are a succession of calendars invented or used for over two millennia in Greater Iran...
years 1993 and 2007. Foreign direct investment in Iran
Foreign Direct Investment in Iran
Foreign direct investment in Iran has been hindered by unfavorable or complex operating requirements and by international sanctions, although in the early 2000s the Iranian government liberalized investment regulations. Iran ranks 62nd in the World Economic Forum's 2011 analysis of the global...
hit a record $10.2 billion in 2007 from $4.2 billion in 2005 and $2 million in 1994. Foreign transactions with Iran amounted to $150 billion of major contracts between 2000 and 2007, including private and government lines of credit. In 2007, Iran had $62 billion worth of assets abroad. The EIU
Economist Intelligence Unit
The Economist Intelligence Unit is part of the Economist Group.It is a research and advisory company providing country, industry and management analysis worldwide and incorporates the former Business International Corporation, a U.S. company acquired by the parent organization in 1986...
estimates that Iran's net FDI will rise by 100% between 2010–2014.
Foreign investors have concentrated their activities in the energy, vehicle manufacture, copper mining, construction, utilities, petrochemicals, clothing, food and beverages, telecom and pharmaceuticals sectors. Iran is a member of the World Bank's Multilateral Investment Guarantee Agency
Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency is a member organization of the World Bank Group that offers political risk insurance. It was established to promote foreign direct investment into developing countries. MIGA was founded in 1988 with a capital base of $1 billion and is headquartered in...
. In 2006, the combined net worth of Iranian citizens abroad was about 1.3 trillion dollars.
According to the head of the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), Iran ranked 142 among 181 countries in terms of working conditions in 2008. Iran stands at number 96 in terms of business start-up, 165 in obtaining permits, 147 in employment, 147 in asset registration, 84 in obtaining credit, 164 in legal support for investments, 104 in tax payments, 142 in overseas trade, 56 in contract feasibility and 107 in bankruptcy. Iran ranks 62nd in the World Economic Forum
World Economic Forum
The World Economic Forum is a Swiss non-profit foundation, based in Cologny, Geneva, best known for its annual meeting in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland....
's 2011 analysis of the global competitiveness of 142 countries
Global Competitiveness Report
The Global Competitiveness Report is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2011–2012 report covers 142 major and emerging economies....
.
Firms from over 50 countries invested in Iran between 1992–2008, with Asia and Europe the largest participants as shown below:
| Continent of origin | Leading countries investing in Iran (1992–2008) | Number of projects | Total amount invested |
|---|---|---|---|
| Asia | United Arab Emirates (UAE), Singapore, Indonesia and Oman | 190 | $11.6 billion |
| Europe | Germany, the Netherlands, Spain, UK, Turkey, Italy and France (20 countries in total) | 253 | $10.9 billion |
| Americas | Canada, Panama, the USA and Jamaica | 7 | $1.4 billion |
| Africa | Mauritius, Liberia and South Africa | $8 billion | |
| Australia | Australia | 1 | $682 million |
Iran and the World Trade Organization
Iran has held observer status at the World Trade OrganizationWorld Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO) since 2005. Although the United States has consistently blocked Iran's bid to join the WTO since it first asked for membership, the country was accepted in a goodwill gesture to ease nuclear negotiations between Iran and the international community.
Should Iran eventually gain membership status in the WTO
Iran and WTO
Iran officially submitted an application to join the World Trade Organization on 19 July 1996. From July 1996 to May 2001, Iran’s application had not been considered, mainly as a result of US objections and the US veto power in the WTO Council. From May 2001 Iran’s application for WTO membership...
, among other prerequisites, copyright law
Iran and copyright issues
According to Circular 38a of the U.S. Copyright Office, Iran has no official copyright relations whatsoever with the United States.Published works originating in Iran thus are not copyrighted in the United States, regardless of the local copyright laws of these countries. See 17 U.S.C. § 104,...
s will have to be enforced in the country. This will require a major overhaul of business and trade operations. The country is hoping to attract billions of dollars worth of foreign investment whilst creating a more favorable investment climate through reduced restrictions and duties on imports. Creation of free trade zone
Free trade zone
A free trade zone or export processing zone , also called foreign-trade zone, formerly free port is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities...
s such as Qeshm
Qeshm
Qeshm Qeshm Qeshm (Persian: قشم - pronounced kē´shm is an Iranian island situated in the Strait of Hormuz, and separated from the mainland by the Clarence Strait/Khuran in the Persian Gulf .-Geography:...
, Chabahar
Chabahar Free Trade-Industrial Zone
Chabahar Free Trade–Industrial Zone is an Iranian free trade zone formed according to the law on the establishment and administration of free trade–industrial zones ....
and Kish Island should also assist in this process. Iran has allocated $20 billion in 2010 to loans for the launch of twenty trade centers in other countries.
International sanctions
After the Iranian RevolutionIranian Revolution
The Iranian Revolution refers to events involving the overthrow of Iran's monarchy under Shah Mohammad Reza Pahlavi and its replacement with an Islamic republic under Ayatollah Ruhollah Khomeini, the leader of the...
in 1979, the United States ended its economic and diplomatic ties with Iran, banned Iranian oil imports and froze approximately $11 billion of its assets. In 1996, the U.S. Government passed the Iran and Libya Sanctions Act
Iran and Libya Sanctions Act
The Iran and Libya Sanctions Act of 1996 was a 1996 act of Congress that imposed economic sanctions on firms doing business with Iran and Libya. On September 30, 2006, the act was renamed to the Iran Sanctions Act , as it no longer applied to Libya, and extended until December 31, 2011...
(ILSA) which prohibits U.S. (and non-U.S. companies) from investing and trading with Iran in amounts of more than $20 million annually. Since 2000 exceptions to this restriction have been made for items including pharmaceuticals and medical equipment.
Iran's Nuclear Program has been the subject of contention with the West since 2006 over suspicions of Iran's military intentions. This has led the UN Security Council to impose sanctions
Sanctions against Iran
This article outlines economic, trade, scientific and military sanctions against Iran, which have been imposed by the U.S. government, or under U.S. pressure by the international community through the United Nations Security Council...
against select companies linked to the nuclear program, thus furthering the country's economic isolation on the international scene. Sanctions notably bar nuclear, missile and many military exports to Iran and target investments in oil, gas and petrochemicals, exports of refined petroleum products, as well as the Iranian Revolutionary Guard Corps, banks, insurance, financial transactions and shipping
Iran Shipping Lines
The maritime fleet of the Islamic Republic of Iran Shipping Lines comprises 115 ocean-going vessels with the total capacity of . The ownership structure of the fleet comprises 87 ocean-going vessels in IRISL and 28 different types of ships under the flag of subsidiaries, including Khazar Shipping,...
.
See also
- Donya-e-Eqtesad – leading Iranian business newspaper
- Energy superpowerEnergy superpowerThe term energy superpower does not have a clear definition. It has come to be used to refer to a nation that supplies large amounts of energy resources to a significant number of other states, and which therefore has the potential to influence world markets to gain a political or economic...
- Foreign relations of Iran – bilateral info on trade (by country)
- Government of Iran – with links to ministries and affiliated agencies
- International Association of Iranian ManagersInternational Association of Iranian ManagersInternational Association of Iranian Managers also known as I-AIM among its members is a not for profit and non governmental organization aimed at improving quality of management knowledge, practice and skills in Iran and the Middle East region...
- International Iranian Economic AssociationInternational Iranian Economic AssociationThe International Iranian Economic Association is a private, non-profit, and non-political organization of scholars interested in the study of economic issues concerning Iran, in the broadest sense of the term...
- Iran's international rankings in economy
- Iran Chamber of Commerce Industries and MinesIran Chamber of Commerce Industries and MinesThe Iran Chamber of Commerce, Industries and Mines is a non-profit semi-governmental institution, established to facilitate economic growth and development in the country. ICCIM is a forum in the field of industries, mines and agriculture...
- Iranian CalendarIranian calendarThe Iranian calendars or sometimes called Persian calendars are a succession of calendars invented or used for over two millennia in Greater Iran...
- Iranian economists
- Iranian targeted subsidy plan
- List of Iranian companies
- List of Iranian people by net worth
- List of major economic laws in Iran
- Ministry of Economic Affairs and Finance (Iran)Ministry of Economic Affairs and Finance (Iran)The Ministry of Economic Affairs and Finances function are:*acting as the state treasury,*public finance,*economic and financial policy making,*implementing tax policies,*in charge of foreign direct investment,...
- Next ElevenNext ElevenThe Next Eleven are eleven countries—Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam — identified by Goldman Sachs investment bank and Jim O'Neill as having a high potential of becoming, along with the BRICS, the world's largest...
– list of countries having a high potential of becoming the world's largest economies in the 21st century - Ravand InstituteRavand InstituteThe Ravand Institute for Economic and International Studies is the first Iranian think tank of its kind. It is an independent, private, non-partisan, non-governmental organization focusing on important policy issues facing Iran...
– Iran's "Davos ForumWorld Economic ForumThe World Economic Forum is a Swiss non-profit foundation, based in Cologny, Geneva, best known for its annual meeting in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland....
" - Smuggling in Iran
- Taxation in Iran
External links
Publications and statistics- The World Factbook: Iran's entry – United States Central Intelligence Agency
- The Economist: Iran – Forecast, factsheet, economic data & structure (Login required for Economist Intelligence UnitEconomist Intelligence UnitThe Economist Intelligence Unit is part of the Economist Group.It is a research and advisory company providing country, industry and management analysis worldwide and incorporates the former Business International Corporation, a U.S. company acquired by the parent organization in 1986...
reports) Statistical Center of Iran – Database & index of publications - World Bank Statistics – Social and economic indicators for Iran
- Iran Business Forecast Report - Business Monitor International (Login required for sector reports)
- Global Investment in Iran – American Enterprise InstituteAmerican Enterprise InstituteThe American Enterprise Institute for Public Policy Research is a conservative think tank founded in 1943. Its stated mission is "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and...
(List of major international companies investing in Iran broken down by their nationality, sector of activity and amount invested) Turquoise Partners – "Iran Investment Monthly" (Reports on the Tehran Stock ExchangeTehran Stock ExchangeThe Tehran Stock Exchange is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. As of July 2010, 337 companies with a market capitalization of US$72 billion were listed on TSE...
and Iran's economy)
Government websites Central Bank of Iran (Including detailed statistics about Iran's economy and sectors) Trade Promotion Organization of Iran – Many useful information about trade, FDI, economic reports, customs, laws, statistics, links and opportunities for investors in Iran (Affiliated to Iran's Ministry of Commerce
Ministry of Commerce (Iran)
The Ministry of Commerce of Iran was the main organ of the Government in charge of the regulation and implementation of policies applicable to domestic and foreign trade...
)
- US Department of Energy: Iran's entry – Oil, gas, electricity, data, profile, analysis, weblinks/resources
- Australian Government – Doing Business in Iran and Iran Profile – Many practical information and sector specific reports, with useful websites and resources (Login required for sector reports) High Council of Iran Free Trade-Industrial Zone – Official site with information on Iran's Free Trade Zones
General
- Iran in Maps – BBCBBCThe British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
(Population, land, infrastructure) - Pars Times – Iran Business Resources – Comprehensive list of resources on the Internet relating to Iran and its economy – Business etiquette and tourismTourism in IranTourism attracted 2.3 million people to Iran in 2009. Iran plans to have 20 million tourists annually by 2015 ....
information on Iran