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Economy

Sunday, October 14, 2007

Active ImageIran, with a population of 80 million people, is now preparing the required technical and scientific substructures and developing the expertise and efficient manpower in order to develop more and integrate into the world economy. Iran's economy, which is now in its transitional stage from the semi-traditional economy to modern one, was mainly based on oil income before the Islamic Revolution and during Pahlavi dynasty. Despite the huge oil incomes especially during 60's, the necessary investments were not made on substructure sectors of the country including roads, airports, drams, and small industries; instead most of the income was recycled to the West especially the United States in the form of arms purchases from these countries. So the country faced severe shortage in some economic fields. This led to the growth of shanty houses in urban areas like Tehran and emergence of unemployment and at the same time some economic areas such as agriculture and industry faced stagnation.

After the Islamic Revolution, the economic conditions underwent a sea change. At the beginning of revolution, Iran's economy was more centralized and also on the basis of oil income and due to the occurrence of the imposed war, the entire energy of the nation was harnessed to face the war. After the war, with the election of Akbar Hashemi Rafsanjani as president, the economic adjustment polices were gradually executed in the form of five-year development plans. Some of its major measures are as follows: privatization, production diversity, increase of export of non-petroleum goods, and taking deregulation and de-monopolization of industry and services sectors. At this stage, the government made large investments in infrastructure sectors including: road construction, especially in remote places, dam construction, electrification and establishing the upstream and downstream industries in such a way that now only less than 10% of remote regions, has some difficulties in their access to water, electricity and road.

In the early years of fourth development plan, Islamic Republic of Iran took different measures some of which included the following: in order to strengthen the economic power of government and preparing the grounds to attract foreign investment, Iran passed the law to protect and encourage foreign investment. On the other hand, the establishment of Foreign Exchange Reserve fund aimed to reduce the reliance of Iran's economy on oil exports and parallel with it, boos export of non-oil products which stood at nine billion dollars in 2004.

Moreover, Iranian economy grew due to some other measures including the following: the increase of gross domestic products, the augmentation of government income due oil price rise, reformation of the taxation laws during the recent years, the gradual liberalization of economy and structural reforms, and modification of exports and investment laws. The said measures made suitable conditions for economic development in such a manner that the International Monetary Fund (IMF) has evaluated Iran's economy as an improving and developing economy.

Regarding the government debts which is one of the major indexes in determining economic condition of a country, Iran's foreign commitments is less than 10% of the gross domestic products. In this regard, Iran has a noticeable place among the financial organizations. Moreover, the International Monetary Fund (IMF) in its last report of Iran's economy announced: The foreign exchange reserves of Iran in 2004 was 27.4 billion dollars which was three billion dollars more than that of the previous year. Besides, the IMF projected 6.6% growth for Iran's economy during the year 2003 and anticipated that Iran's petroleum and non-oil exports would be 44.2 billion dollars in 2004, while the value of imports with a little increase is predicated to stand at 45.6 billion dollars. According to the report the government's income in 2004 was 27% of the gross domestic products. 15.5% of which was resulted from oil and 11.5% of the remaining from non-oil sector. In addition, the share of oil in the government budget would decrease 8% compared to the previous year.

In the field of exports, a noticeable jump has been observed in the country: the value of Iran's exports has experienced a noticeable growth both from the viewpoints of weight and value. This increase has been 77% in industry and 67% in petrochemicals.

With regard to oil and upstream industries, heavy investments have been made in oil, gas and petrochemical industries. Iran in 2004 produced about 3.9 million barrels of oil per day. Based on the performed programs, Iran was to become the first manufacturer of petrochemical products by 2005, the second producer of OPEC's crude oil and also the second gas producer in the world.

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