The economy of Iran has been improving steadily over the past two decades but a continuing strong labour force growth unmatched by commensurate real economic growth is driving up unemployment to a level considerably higher than the official estimate of 11%. According to experts, annual economic growth above five per cent would be needed to keep pace with the 900,000 new labour force entrants each year.
Government spending as percent of total budget was 6% for health care, 16% for education and 8% for the military in the period 1992-2000 and contributed to an average annual inflation rate of 14 percent in the period 2000-2004, though unofficial estimates place the figure above 20 percent today. Iranian budget deficits have been a chronic problem, in part due to large-scale state subsidies totaling more than $40 billion per year (2006), including foodstuffs and especially gasoline.
The Government is attempting to diversify away from oil by investing revenues in other areas of the economy, including, car manufacturing, aerospace industries, consumer electronics, petrochemicals and nuclear technology. Also, Iran has a great potential for development in mining, tourism, information and communication technology (ICT).
In 2006, about 45 percent of the government's budget came from oil and natural gas revenues and Iran's GDP was estimated at $610 billion at PPP ($8,900 per capita). The informal economy is also important. Because of these figures and the country’s diversified but small industrial base, the United Nations classifies Iran's economy as semideveloped.
Pre-revolutionary Iran's economic development was rapid. Traditionally an agricultural society, by the 1970s, Iran had achieved significant industrialization and economic modernization. However, the pace of growth had slowed dramatically by 1978, just before the Islamic revolution.
Iran's long-term objectives since the 1979 revolution have been economic independence, full employment, and a comfortable standard of living for its citizens, but at the end of the 20th century the country's economic future was lined with obstacles. Iran's population more than doubled in that period, and its population grew increasingly young. In a country that has traditionally been both rural and agrarian, agricultural production has fallen consistently since the 1960s (by the late 1990s Iran was a major food importer), and economic hardship in the countryside has driven vast numbers of people to migrate to the largest cities.
The rates of both literacy and life expectancy in Iran are high for the region, but so, too, is the unemployment rate, and inflation is regularly in the range of 20 percent annually. Iran remains highly dependent on its one major industry, the extraction of petroleum and natural gas for export, and the government faces increasing difficulty in providing opportunities for a younger, better-educated workforce, which has led to a growing sense of frustration among lower- and middle-class Iranians.
After the end of hostilities with Iraq in 1988, the government has tried to develop the country's communication, transportation, manufacturing, and energy infrastructures (including its prospective nuclear power facilities) and hospitals & schools and has begun the process of integrating its communication and transportation systems with those of neighbouring states.
Centralisation vs. Privatization
Also after the war in 1988, the Iranian government declared its intention to privatize most state industries in an effort to stimulate the ailing economy. The sale of state-owned factories and companies proceeded slowly, however (mostly because of the opposition by a majority of nationalists in the Iranian Parliament Majlis), and most industries remained state-owned in the early 21st century (70% of the economy as of 2006). The majority of heavy industry—including steel, petrochemicals, copper, automobiles, and machine tools—was in the public sector, while most light industry was privately owned.
Iran's economy is largely state owned. However the government continues in its drive to privatize various sectors and open its economy to the world.
According to the article 44 of Constitution, the economy of Iran is to consist of three sectors: state, cooperative, and private; and is to be based on systematic and sound planning.
- The state sector is to include 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; all these will be publicly owned and administered by the State.
- The cooperative sector is to include cooperative companies (Bonyads) and enterprises concerned with production and distribution, in urban and rural areas, in accordance with Islamic criteria.
A strict interpretation of the above has never been enforced in the Islamic Republic and the private sector has been able to play a much larger role than is outlined in the Constitution. In recent years, the role of the private sector has been further on the increase. Furthermore, an amendment of the article in 2004 has allowed 80 percent of state assets to be privatized.
Five-Year Economic Development Plan (2005-10)
The Fourth Five-Year Economic Development Plan (2005-10) sets the guidelines and points the direction in which the trade sector will be taking over the next five years. In it, the focus will be on expanding trade interaction with the global community and pursuing an active presence in international markets. To achieve this would require raising exports substantially. Another area of focus will be to develop free trade zones and turning them into gateways to international markets.
On the domestic front, the priority will be improving the overall situation; i.e. regulating the domestic market one the one hand, and maintaining a well-functioning supply of basic commodities on the other. The latter would need improving the subsidy distribution system to relieve the government of the huge financial burden on subsidy payments. Another obligation the plan places on the government is to provide economic justification for the pricing of basic commodities and public services.
The five-year economic development plan also calls for the creation of a "national Internet", introduction of foreign banks, a fourfold expansion of petrochemical output, to 56 million tons per year, the creation of 700,000 new jobs per year, and the generation of 6,000 MW of electricity through nuclear technology by 2010 to meet its increasing demand for energy.
In the early 21st century the service sector contributed the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. About 45 percent of the government's budget came from oil and natural gas revenues, and 31 percent came from taxes and fees. In 2006 the GDP was estimated at $195 billion ($610 billion at PPP), or $2,790 per capita ($8,900 at PPP). The informal economy is also important. Because of these figures and the country’s diversified but small industrial base, the United Nations classifies Iran's economy as semideveloped.
The following is the trend chart of the Iranian GDP at market prices estimated by the IMF, with figures in millions of Iranian Rial. For purchasing power parity comparisons, the US Dollar is exchanged at 3,149.33 Iranian Rials only.
Iran's population reached 70 million in 2006. More than two-thirds of the Iranians are under the age of 30, and the literacy rate stands at 86%.
The industrial sector—including mining, manufacturing, and construction—contributed 42 percent of the GDP and employed 31 percent of the labor force in 2004. Mineral products, notably petroleum, dominate Iran’s exports revenues (80%), but mining employs less than 1 percent of the country’s labor force.
About 20% of the land in Iran is arable; agriculture contributes just over 11% to the gross national product and employs a third of the labor force. The main food-producing areas are in the Caspian region and in the valleys of the northwest. Some northern and western areas support rain-fed agriculture, while other areas require irrigation for successful crop production.
Agriculture contributes just over 11% to the gross national product and employs a third of the labor force. By 1997, the gross value of products in Iran's agricultural sector reached $25 billion and by 2003, a quarter of Iran's non-oil exports were agricultural based.
The principal obstacles to agricultural production are primitive farming methods, overworked and underfertilized soil, poor seed, and scarcity of water. About one third of the cultivated land is irrigated; the construction of multipurpose dams and reservoirs along the rivers in the Zagros and Elburz mts. has increased the amount of water available for irrigation. Agricultural programs of modernization, mechanization, and crop and livestock improvement, and programs for the redistribution of land are increasing agricultural production.
Wheat, the most important crop, is grown mainly in the west and northwest; rice is the major crop in the Caspian region. Barley, corn, cotton, sugar beets, tea, hemp, tobacco, fruits (including citrus), potatoes, legumes (beans and lentils), vegetables, fodder plants (alfalfa and clover), spices (including cumin, sumac, and saffron), nuts (pistachios, almonds, and walnuts), and dates are also grown, and livestock is raised. Livestock products include lamb, goat meat, beef, poultry, milk, eggs, butter, cheese, wool, and leather. Honey is collected from beehives, and silk is harvested from silkworm cocoons. The northern slopes of the Elburz Mts. are heavily wooded, and forestry products are economically important; the cutting of trees is rigidly controlled by the government, which also has a reforestation program. In the rivers entering the Caspian Sea are salmon, carp, trout, and pike; sturgeon are abundant in the Caspian Sea.
Since 1979 commercial farming has replaced subsistence farming as the dominant mode of agricultural production. By 1997, the gross value of products in Iran's agricultural sector had reached $25 billion. Iran has attained 90 percent self-sufficiency in essential agricultural products; total wheat and rice production fails to meet domestic food requirements, however, making substantial imports necessary. By 2003, a quarter of Iran's non-oil exports were agricultural based. Major agricultural exports include fresh and dried fruits, nuts, animal hides, processed foods, and spices.
The share of Iran's oil sector in the GDP increased from 15% in 2002 to 25% in 2006, mainly because of a sharp increase in oil prices Iran has a long tradition of producing artisan goods, including Persian carpets, ceramics, copperware and brassware, glass, leather goods, textiles, and woodwork. Iran’s rich carpet-weaving tradition dates from pre-Islamic times, and it remains an important industry and contributes substantially to rural incomes. Textile mills, based on domestic cotton and wool, employed about 400,000 people in 2000 and are centred in Tehran, Esfahan and along the Caspian coast.
Large-scale manufacturing in factories began in the 1920s and developed gradually. During the Iran-Iraq War, Iraq bombed many of Iran’s petrochemical plants, and the large oil refinery at Abadan was badly damaged and forced to halt production. Reconstruction of the refinery began in 1988 and production resumed in 1993. However, the war also stimulated the growth of many small factories producing import-substitution goods and materials needed by the military.
The country’s major manufactured products are petrochemicals (w/a fertilizer plant in Shiraz), steel (w/mills in Esfahan and Khuzestan), and copper products. Other important manufactures include automobiles (with production crossing the 1 million mark in 2005),  electric appliances (television sets, refrigerators, washing machines, and other consumer items), telecommunications equipment, cement, industrial machinery (Iran has the largest operational stock of industrial robots in West Asia) , paper, rubber products, processed foods (including refined sugar and vegetable oil), carpets, leather products and pharmaceuticals. Currently, 55 pharmaceutical companies in Iran produce more than 96 per cent (quantitatively) of medicines on the market.
Iran Khodro is the largest car manufacturer in the Middle-East. Iran's automobile production crossed the 1 million mark in 2005. Iran Khodro has established joint-ventures with foreign partners on 4 continents.
As of 2001, there were 13 public and privately owned automakers in Iran, of which two - Iran Khodro and Saipa - accounted for 94% of the total domestic production. Iran Khodro, which produced the most prevalent car brand in the country - the Paykan, which has been replaced in 2005 by the Samand -, is still the larger with 61% of the market in 2001, while Saipa contributed 33% of Iran’s total production in the same year. The other car manufacturers, such as the Bahman Group, Kerman Motors, Kish Khodro, Raniran, Traktorsazi, Shahab Khodro, and others together produced only 6%.
Iran's 2005 defence budget was estimated to be $6.3 billion (3.3% of GDP) by London's International Institute for Strategic Studies or $91 per capita. Iran's defense industry has also taken great strides 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, submarines, and a fighter plane. As of 2006, Iran had exported weapons to 57 countries, including NATO members, and sold $100 million worth of military equipment.
70 percent of the Iranians own homes. The major problems facing the construction sector are shortages in housing, specially in urban areas, and the poor quality of many constructions, which need anti-seismic reinforcement and/or renovation.
The annual turnover in the construction industry amounted to US$38.4 billion in 2005. Until the early 1950s the construction industry was limited largely to small domestic companies. Increased income from oil and gas and the availability of easy credit, however, triggered a subsequent building boom that attracted major international construction firms to Iran. This growth continued until the mid-1970s, when, because of a sharp rise in inflation, credit was tightened and the boom collapsed. The construction industry had revived somewhat by the mid-1980s, but housing shortages have remained a serious problem, especially in the large urban centres. 70 percent of the Iranians own homes. In recent years, Iran has also become one of the world's largest dam builders.
Energy and Petroleum
Iran holds 10% of the world's proven oil reserves. Iran also has the world's second largest reserves of natural gas (15% of the world's total); these are exploited primarily for domestic use. Since 1913 Iran has been a major oil exporting country. The chief oil fields are found in the central and southwestern parts of the Zagros mountains in western Iran. Oil also is found in northern Iran and in the offshore waters of the Persian Gulf. Domestic oil and gas, along with hydroelectric power facilities, provide the country with power. In the late 1970s it ranked as the fourth largest oil producer (OPEC's second largest oil producer) and the second largest oil exporter in the world. Following the 1979 revolution, however, the government reduced daily oil production in accordance with an oil conservation policy. Further production declines occurred as result of damage to oil facilities during the war with Iraq. Oil production began increasing in the late 1980s due to the repair of damaged pipelines and the exploitation of newly discovered offshore oil fields in the Persian Gulf.
Iran holds 10% of the world's proven oil reserves and 15% of its gas. It is OPEC's second largest exporter and the world's fourth oil producer.
Major refineries are located at Abadan (site of the country's first refinery, built 1913), Kermanshah, and Tehran. Pipelines move oil from the fields to the refineries and to such exporting ports as Abadan, Bandar-e Mashur, and Kharg Island. In the late 1990s, Iran's state-owned oil and gas industry entered into major exploration and production agreements with foreign consortiums. Iran will commission its first 1 billion dollar nuclear power plant in Bushehr in 2008.
By 2004 Iran’s annual oil production was 1.4 billion barrels, creating a net profit of $50 billion. Iran also manufactures 50-80% of its industrial equipments domestically, including oil tankers, oil rigs, offshore platforms and exploration instruments. Iran is planning to open a commodity exchange, referred as 'International Petroleum Exchange'. A petrobourse for petroleum, petrochemicals and gas in various non-dollars currencies, primarily the euro. If successful, this would establish a euro-based pricing mechanism for oil trading, or oil marker as it is called by traders.
Iran’s mining industry is under-developed. Mineral production contributes only 0.6 per cent to the country’s GDP. Add other mining-related industries and this figure increases to just four per cent. Many factors have contributed to this, namely lack of suitable infrastructure, legal barriers, exploration difficulties, and government control over all resources.
Although the petroleum industry provides the majority of economic revenues, about 75 percent 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 (most as a coproduct of the Sar Cheshmeh copper complex operations). The mines at Sar Cheshmeh in Kerman Province contain the world's second largest lode of copper ore. Large iron ore deposits lie in central Iran, near Bafq, Yazd, and Kerman. The government owns 90 per cent of all mines and related large industries in Iran and is seeking foreign investment for the development of the mining sector. In the steel and copper sectors alone, the government is seeking to raise around US$1.1 billion in foreign financing.
About 1,659,000 foreign tourists visited Iran in 2004; most came from Asian countries, including the republics of Central Asia, while a small share came from the countries of the European Union and North America. The most popular tourist destinations are Esfahan, Mashhad, and Shiraz.
Urbanization has contributed to significant growth in the service sector. In 2004 the sector ranked as the largest contributor to the GDP (48 percent) and employed 44 percent of workers. Important service industries include public services (including education), commerce, personal services, professional services, and tourism. The tourist industry declined dramatically during the war with Iraq in the 1980s but has subsequently revived. About 1,659,000 foreign tourists visited Iran in 2004; most came from Asian countries, including the republics of Central Asia, while a small share came from the countries of the European Union and North America. The most popular tourist destinations are Esfahan, Mashhad, and Shiraz.
The constitution entitles Iranians to basic health care. In the early 2000s, about 65 percent of the population was covered by the voluntary national health insurance system. Although over 85 per cent of the population use an insurance system to reimburse their drug expenses, the government heavily subsidises pharmaceutical production/importation in order to increase affordability of medicines and vaccines. The total market value of Iran’s health and medical sector was almost US$240 billion in 2002 and is forecasted to rise to US$ 310 billion by 2007.
Despite efforts in the 1990s toward economic liberalization, government spending—including expenditures by quasi-governmental foundations (Bonyad) that dominate the economy—has been high. Estimates of service sector spending in Iran are regularly more than two-fifths of the GDP, and much of that is government-related spending, including military expenditures, government salaries, and social service disbursements.
Social protection is extended to the self-employed workers, who voluntarily contribute between 12 and 18% their incomes according to desired protection. Social protection covers the employees between the age of 18 and 65 years, and the financing is shared between the employee (7% of the wages), the employer (20 to 23% of the wage bill) and the State (which supplements the contribution of the employer to a total value of 3% of the wage bill). The social security makes it possible to ensure the employees against unemployment, the disease, old age (retirement pension), the occupational accidents. Iran did not legislate in favour of a universal social protection, but in 1996, the Center of the statistics of Iran estimates that more than 73% of the Iranian population is covered by a Social Security.
Civil servants, the regular military, law enforcement agencies, and the Islamic Revolutionary Guard Corps, Iran’s second major military organization, have their own pension systems. In 2003 the minimum standard pension was 50 percent of the worker’s earnings but not less than the amount of the minimum wage. Iran spent 22.5 percent of its 2003 national budget on social welfare programs. More than 50 percent of that amount covered pensions.
Welfare programs for the needy are managed by more than 30 individual public agencies, and semi-state organizations called Bonyads, as well as by several private non-governmental organizations. In 2003, the government began to consolidate its welfare organizations in an effort to eliminate redundancy and inefficiency. Bonyads are a consortium of over 120 organizations which are tax-exempt, receive government subsidies and religious donations and answer directly to the Supreme Leader of Iran. They control over 20% of Iran's GDP and they are involved in everything from vast soybean and cotton fields to hotels to soft drinks to auto-manufacturing to shipping lines. Bonyads are overstaffed, corrupt, and generally not profitable. In 2007, Iran had 12 million people living below the poverty line. Six million of these people were not supported by any foundation or organization.
Iran's inflation rate stood around 14% in 2005 but some unofficial estimates place this number above 20% today and its external debt was less than 8% of the GDP in 2006.
The government makes loans and credits available to industrial and agricultural projects, primarily through banks.
Iran’s unit of currency is the rial. The official exchange rate averaged 8,614 rials to the U.S. dollar in 2004. However, rials are exchanged on the unofficial market at a much higher rate. In 1979 the government nationalized all private banks and announced the establishment of a banking system whereby, in accordance with Islamic law, interest on loans was replaced with handling fees; the system went into effect in the mid-1980s. The banking system consists of the central bank also known as Bank Markazi Iran, which issues currency and oversees all state and private banks; several commercial banks that are headquartered in Tehran but have branches throughout the country; two development banks; and a housing bank that specializes in home mortgages. Accounts of the state-owned commercial banks are dominated by loans to state and bonyad enterprises and to large-scale private firms. The government began to privatize the banking sector in 2001, when it issued licenses to two new privately owned banks. The Tehran Stock Exchange trades the shares of more than 400 registered companies.
Tehran is the hub of the country's communication and transport network. The city has numerous large museums, art centers, palace complexes and cultural centers and host 45% of Iran's industries.
Iran has an extensive paved road system linking most of its towns and all of its cities. In 2002 the country had 178,152 km (111,000 mi) of roads, of which 66 percent were paved. There were 30 passenger cars for every 1,000 inhabitants. Trains operated on 6,405 km (3,980 mi) of railroad track.
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 e-Torkeman on the Caspian Sea and Korramshahr and Bandar e-Khomeyni on the Persian Gulf. Dozens of cities have airports that serve 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, and several private companies provide bus service between cities. Tehran, Mashhad, Shiraz, Tabriz, Ahwaz and Esfahan are in the process of constructing underground mass transit rail lines.
The government runs the broadcast media, which includes five national radio stations and five national television networks, as well as dozens of local radio and television stations. In 2000 there were 252 radios and 158 television sets in use for every 1,000 residents. There were 219 telephone lines and 110 personal computers for every 1,000 residents. Computers for home use became more affordable in the mid-1990s, and since then demand for access to the Internet has increased (Iran is the world's fourth largest country of bloggers). In 1998 the Ministry of Post, Telegraph & Telephone (renamed the Ministry of Information & Communication Technology) began selling Internet accounts to the general public. In 2006, the Iranian telecom industry's revenues were estimated at $1.2 billion.
Foreign Trade and Economic Relations
Petroleum constitutes the bulk of Iran's exports, valued at $46.9 billion in 2006. Iran's non-oil exports stood at $16.3 billion in the year ending March 20, 2007, a rise of 47.2 percent from the previous period.. The total volume of imports to Iran rose by 189% from $13.7 billion in 2000 to an estimated $39.7 billion in 2005. The Iranian diaspora combined net worth was estimated at 1.3 trillion dollars in 2006.
Iran's major commercial partners are China, Germany, South Korea, Japan, France, Russia and Italy. From 1950 until 1978, the United States was Iran's foremost economic and military partner; thus participating greatly in the modernization of its infrastructure and industry. After the Iranian Revolution in 1979 though, the United States ended its economic and diplomatic ties, banned Iranian oil imports and froze $12 billion of its assets. In 1996, the U.S. Government passed the Iran and Libya Sanctions Act which prohibits U.S. and non-U.S. companies from investing and trading with Iran for more than $20 million annually, with the exception, since 2000, for items like pharmaceuticals, medical equipment, caviar and Persian rugs.
Iran major commercial partners are China, Germany, South Korea, Japan, France, Russia and Italy. In 1996, he U.S. Government imposed sanctions against Iran because of its alleged support for terrorism in the Middle-East.
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 is also expanding its trade ties with Turkey and Pakistan and shares with its partners the common objective of the creation of a single economic market in West and Central Asia, like the European Union called ECO.
Since 2003, Iran has also increasingly invested in the economy and reconstruction of its neighboring countries like Iraq and Afghanistan. In Dubai, UAE, it is estimated that Iranians expatriates are handling over 20% of its domestic economy with an equal proportion of its population. Money is 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 the demanded consumer goods.
More recently, Iran's Nuclear Program has become the subject of contention with the West because of suspicions regarding Iran's military intentions. This has led the UN security council to impose sanctions against Iran, on select Iranian companies linked to this program, thus furthering its economic isolation on the international scene.
Foreign Direct Investment
Foreign investment has been hindered by unfavorable or complex operating requirements in Iran and by international sanctions, although in the early 2000s the Iranian government liberalized investment regulations. In the early 2000s, foreign investors have concentrated their activity in a few sectors of the economy: the oil and gas industries, vehicle manufacture, copper mining, petrochemicals, foods, and pharmaceuticals. The most active investors have been Norwegian, British, French, Japanese, South Korean, Swedish, and Swiss companies. The Swedish Svedala Industri has played a major role in developing Iran’s copper mines since the late 1990s. The Kia, Nissan, Peugeot, and Renault auto companies have licensing agreements with Iranian auto manufacturers. Nestlé of Switzerland and Coca-Cola and Pepsi-Cola of the United States have joint ventures with Iranian companies. Total, Statoil, Shell, and Lucky Goldstar of South Korea have been active in Iran’s natural gas industry, while Tata Steel of India has been investing in the steel sector more recently. Iran’s constitution prohibits direct concession of petroleum rights to foreign investors. In the 1990s and early 2000s, some indirect oilfield development agreements were made with foreign firms. Buyback contracts in the oil sector, for instance, are arrangements in which the contractor funds all investments, receives remuneration from the National Iranian Oil Company (NIOC) in the form of an allocated production share, then transfers operation of the field to NIOC after a set number of years, at which time the contract is completed. French and South African firms gained major telecommunications contracts in 2004 and 2005, respectively.
Foreign investment hit a record $10.2 billion in the Iranian year to March 20, 2007 from $4.2 billion in 2005 and $2 million in 1994. Asian entrepreneurs made the largest investments in the Islamic state by investing in 40 out of 80 projects funded by foreigners. The largest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, steel and oil derivates. The figure exceeded $8.76 billion. Water, electricity and gas sector ranked second, attracting $874.83 million. In the third place, the real estate sector absorbed more than $406 million. Investments in service, telecommunication and transportation as well as mines reached $193 million, $14.3 million and $14.2 million respectively. Asian countries invested $7.666 billion in various projects followed by several multinational consortia. Investments by these multinational companies exceeded $1.39 billion (in four projects). Although European entrepreneurs were involved in 34 projects, they invested only in the range of $1.2 in the Islamic Republic. American countries also committed $12.329 million in the country; while investments by African states registered close to four million dollars.
As a rule of thumb, Iranian law requests at least 30% of subcontracting to Iranian companies for foreign companies investing in Iran; repartiation of profits is allowed. Representation office and after-sale service must be based in Iran.
Iran and the World Trade Organization
Iran has had an observer status at the World Trade Organization (WTO) since 2005. The United States has consistently blocked Iran's bid to join the WTO since Tehran first asked for membership several years ago.
Yet if Iran does eventually gain membership status in the WTO, among other prerequisites, copyright laws will have to be obeyed in Iran. This would require a major overhaul of business and trade operations in Iran, a change which many experts believe would be a price too heavy for Iran's economy to pay at the present time. Still, Iran is hoping to attract billions of dollars worth of foreign investment while creating a more favorable investment climate, such as reduced restrictions and duties on imports and the creation of free trade zones like in Qeshm, Chabahar and Kish Island.
Iran has emerged as one of the world's largest dam builders in recent years, while its power wastage hits $1.1 billion in 2006.
Household income or consumption by percentage share:
- lowest 10%: NA
- highest 10%: NA
Agriculture - products: wheat, rice, other grains, sugar beets, fruits, pistachios, nuts, cotton, dairy products, wool, caviar.
Industrial production growth rate: 3.2% excluding oil (2006 est.)
- production: 155.7 TWh (2004)
- consumption: 145.1 TWh (2004)
- exports: 1.837 TWh (2004)
- imports: 2.17 kWh (2004)
Electricity - production by source:
- fossil fuel: 93% - 75% comes from gas generation, 18% from oil. (2006)
- hydro: 7% (2006)
- other: 0% (2006)
- nuclear: 0% (2006)
See also: Energy of Iran
- production: 3.979 million barrel/day (2005 est.)
- consumption: 1.51 million barrel/day (2001 est.)
- exports: 2.5 million barrel/day (2004 est.)
- imports: NA
- proved reserves: 132.5 billion barrel (2006 est.)
note: 1/3 of Iran's gasoline needs is imported because of insufficient domestic refining capacity, over-consumption and contraband.
- production: 83.9 billion m³ (2004 est.)
- consumption: 85.54 billion m³ (2004 est.)
- exports: 3.56 billion m³ (2004 est.)
- imports: 5.2 billion m³ (2004 est.)
- proved reserves: 26.62 trillion m³ (2005)
Current account balance: $13.13 billion (2006 est.)
Exports - commodities: petroleum 80%, chemical and petrochemical products, carpets and handicrafts, military supplies, cars, agricultural products (fruit and nuts), foodstuff, construction materials (iron, steel, copper) and services, technical services, consumer goods.
Imports - commodities: industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services, electronics and computers.
Landlines: 22 million (2006)
Cellular: 16 million (early 2007 est.)
Internet users: 17 million (2006 est.) - Iran is the world's fourth largest country of bloggers.
Reserves of foreign exchange & gold: $58.46 billion (2006 est.)
Exchange rates: rials per US dollar - 9,246.94 (2006), 8,964 (2005), 8,885 (2004), 8,193.89 (2003)
note: Iran has been using a managed floating exchange rate regime since unifying multiple exchange rates in March 2002.
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- ^ http://www.iranyellowpages.net/en/about_iran/Tourism/Index.shtm tourism
- ^ http://www.tourismiran.ir/
- ^ http://www.irvl.net/six_snapshots.htm
- ^ http://www.sci.org.ir/portal/faces/public/sci_en
- ^ [Statistical Centre, Government of Iran] " گزیده اطلاعات آماری ۱۳۸۵". Retrieved on 3 Feb 2007