An Economic Study Of Iran

Iran is placed in the Middle East. Along the West, Iran is bound by Turkey and Iraq ; on the E by Afghanistan and Pakistan ; on the South by Persian Gulf and Gulf of Oman ; and on the North by Azerbaijan, Armenia, Turkmenistan and the Caspian Sea.

Iran is a rich state in Middle East in footings of resource and labour. The economic system of Iran is highly dependent on green goods and export of crude oil or rough oil in order to financing authorities outgo, and Iran ‘s economic system is extremely affected by fluctuation in planetary oil monetary values. Though Iran does n’t hold any job in instance of crude oil resources because of its immense crude oil militias, but the state is non able to fulfill domestic demand in effect of low degree of gasolene import and unequal refinement capacity ( Ilias 2010 ) .

Before 2000 Iran had a good economic growing. But this grate economic power has been impeded because of high unemployment and rising prices rate and subtractive foreign direct investing. They have to seek foreign investing for expand their crude oil sector ( Ilias 2010 ) .

In the last decennary the monetary value of oil was dramatically high ; in this circumstance Iran ‘s purchase was increased due to high oil monetary values and interacting with planetary issues, but so Iran ‘s economic system may probably to decelerating down caused by the dependence of Iran ‘s economic system on crude oil and other powerless economic field sing the pretty important consequence of international fiscal crises in 2008 as a chief ground ( Ilias 2010 ) .

Iran ‘s economic system is vulnerable by ground of subtractive planetary oil monetary values which caused by international economic recession. Iran ‘s powers to lifting fund for investing and trade is complicated, as a consequence of state ‘s communicating with planetary community, and besides this power have been restrained more due to cut down in international market portions ( Ilias 2010 ) .

As crude oil militias point of position After Saudi Arabia and Canada Iran has the 3rd largest proved petroleum oil militias in the word, and the 2nd greatest gas militias, after Russia. Likewise, Iran has the 2nd largest economic system in Middle East and North Africa after Saudi Arabia and the 2nd largest population after Egypt. However, Iran economically deals with of import challenges. The grosss which are earned from exporting rough oil have a important impact and strong consequence on authorities outgo funding, and Iran ‘s economic system is extremely affected by fluctuation in planetary oil monetary values. High unemployment and rising prices rate ; deficiency of efficient determination devising in economic direction environment ; degree of poorness and Iran ‘s dependence on fuel imports in order to fulfill domestic demand, would be consider as internal challenges ( Ilias 2010 ) .

The Islamic revolution in 1979 has a important consequence on Iran ‘s economic system and policy, similarly made an full alteration on modernness in political issues and economic history. During Iran-Iraq war ( 1980-1988 ) , Iran encountered decrease in crude oil production, reasonably high rising prices rates and backward rate of existent economic growing to compare with 1960s and 1970s which in this two decennary Iran ‘s economic system was dining. During this period Iran is one of the universe ‘s strongest economic systems in footings of existent economic growing, and has existent economic growing rate shut to 10 % , together with increase in per capita income and depreciated degree of rising prices ( Jbili, A. 2007 ) .

After Iran-Iraq war throughout the 1990s continuance, Iran attempted to restitute the local production which is devastated by war, liberalize trade, raise overseas and international dealingss, absorb foreign investing, and eventually, design an economic program under name of five-year economic program to reapportion wealth throughout these series ( Ilias 2010 ) .

Decrease in planetary oil monetary values, sing recovery in oil end product, lead to Iran ‘s economic downswing in the latter portion of the decennary ( Ilias 2010 ) .

Iran ‘s economic overview:

In 2009 Iran faced a weak economic growing, due to decrease in planetary oil monetary values which is occurred in late 2008, restricted crude oil nest eggs in footings of gross because of downswing international economic tendency and consequence of misdirection in domestic economic country.

As can be seen in the tabular array Iran was experienced an expansive economic growing at the earlier portion of the decennary, and besides dramatic one-year alteration in existent GDP with the pinnacle in financial twelvemonth 2007. ( Table )

At that clip, they used economic growing as a beginning of funding in order to cover authorities outgo on precedence sectors, private ingestion, financial and pecuniary policies expansion and enlarged the growing in footings of recognition.

In recent old ages, Increased in planetary crude oil monetary values does non hold a important impact on Iran ‘s economic system to accomplish a good degree of economic growing, Because of insufficient and hapless investing, along with deficiency of equal production. This low degree of investing caused by weak domestic concern environment and the countenances levied against Iran ( ‘Ibid ‘ same beginning ) .

Iran-Iraq war, Eight old ages of intolerable costs and economic downswing for Iran ( 1980-1988 )

One of the most important phenomena which have a pretty negative impact on Iran ‘s economic system took topographic point in October 1980 by Iraq onslaughts on Iran ‘s boundary lines. subtractive planetary oil monetary values between 1982 and 1986 ( see Figure 1 ) , along with the war made critical fortunes for Iran ‘s economic system. Decline in foreign exchange net incomes and incremental tendency of borrowing from banking system due to authorities irresistible impulse are the consequence of impact of subtractive international oil monetary values and the war. From 1979 to 1988 money supply was increased about 18 per centum by the authorities and due to this alteration the one-year rate of rising prices attained 28.7 per cent at 1988 ( see Figure 2 ) . Decrease in per capita income, high rising prices rate and incremental rate of unemployment are the accomplishments of first decennary after the revolution.

Iran ‘s Economic Analysis after Revolution in footings of Socioeconomic Indexs

The first decennary after revolution sing the Iran-Iraq war brought the decrease in bring forthing of goods and services boulder clay to the terminal of war. After the war by increasing tendency of production procedure the GDP per capita shifted to the incremental tendency in 1988 and this upward traveling except 1993 and 1994 ( in this two old ages Iran ‘s GDP faced the negative growing ) continued boulder clay 2007 which is the point that Iran ‘s economic system reached its before revolution class in footings of per capita income. The of import inquiry here is what are the grounds which are tend to diminish in income? Iran ‘s battle in the war could be consider as important factor. Economic downswing caused by subtractive international oil monetary values in mid-1980s. Decline in Iran ‘s buying power, extenuating programs for development and restitute the local production which is devastated by the war, due to decrease in state ‘s oil grosss which is fell to $ 9.673 billion in 1988. Weak and subtractive public and private investing would be considered as a cause for low income.