Economy

 

The rial is Iran's official currency

 

Tehran was one of the first cities in Iran which was modernized in the Pahlavi era. It currently hosts 45% of Iran's large industries.

 

Kish Island is a free-trade zone, which is quickly becoming a major tourist destination.

Main article: Economy of Iran

See also: Economic Cooperation Organization and Next Eleven

Iran's economy is a mixture of central planning, state ownership of oil and other large enterprises, village agriculture, and small-scale private trading and service ventures. Its economic infrastructure has been improving steadily over the past two decades but continues to be affected by inflation and unemployment. In the early twenty-first 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. Government spending contributed to an average annual inflation rate of 14 percent in the period 2000-2004. In 2004 the GDP was estimated at $163 billion ($542 billion at PPP), or $2,440 per capita ($8,100 at PPP). Because of these figures and the country’s diversified but small industrial base, the United Nations classifies Iran's economy as semi developed.

The services sector has seen the greatest long-term growth in terms of its share of GDP, but the sector remains volatile. State investment has boosted agriculture with the liberalization of production and the improvement of packaging and marketing helping to develop new export markets. Thanks to the construction of many dams throughout the country in recent years, large-scale irrigation schemes, and the wider production of export-based agricultural items like dates, flowers, and pistachios, produced the fastest economic growth of any sector in Iran over much of the 1990s. Although successive years of severe drought in 1998, 1999, 2000 and 2001 have held back output growth substantially, agriculture remains one of the largest employers, accounting for 22% of all jobs according to the 1991 census.

Iran's major commercial partners are China, Germany, South Korea, France, Japan, Russia and Italy. Since the late 1990s, Iran has increased its economic cooperation with other developing countries, including Syria, India, Cuba, Venezuela, and South Africa. Iran is also expanding its trade ties with Turkey and Pakistan and shares with its partners the common goal of creating a single economic market in West and Central Asia, much like the European Union called ECO. Iran also expects to attract billions of dollars of foreign investment by creating a more favorable investment climate, such as reduced restrictions and duties on imports, and free-trade zones like in Chabahar and Kish Island.

The current administration continues to follow the market reform plans of the previous one and indicated that it will diversify Iran's oil-reliant economy. It is attempting to do this by investing revenues in areas like automobile manufacturing, aerospace industries, consumer electronics, petrochemicals and nuclear technology. Iran has also developed a biotechnology, nanotechnology, and pharmaceuticals industry. The strong oil market since 1996 helped ease financial pressures on Iran and allowed for Tehran's timely debt service payments. Iranian budget deficits have been a chronic problem, in part due to large-scale state subsidies, totaling more than $40 billion per year, that include foodstuffs and especially gasoline.^[63]

Energy

Main articles: Energy of Iran, Ministry of Petroleum of Iran, and Nuclear programme of Iran

As a further drive toward diversification of energy sources, Iran has also established wind farms in several areas, this one near Manjeel.

Iran ranks second in the world in natural gas reserves and third in oil reserves. Nevertheless, in 2005 Iran spent US$4 billion dollars on fuel imports, mainly because of contraband and inefficient domestic use.^[64] Oil industry output averaged 4 million barrels per day in 2005, compared with the peak output of 6 million barrels per day reached in 1974. In the early 2000s, industry infrastructure was increasingly inefficient because of technological lags. Few exploratory wells were drilled in 2005.

In 2005, a large share of Iran’s natural gas reserves were believed to remain untapped. By 2004, the addition of new hydroelectric stations and the streamlining of conventional coal- and oil-fired stations increased installed capacity to 33,000 megawatts. Of that amount, about 75 percent was based on natural gas, 18 percent on oil, and 7 percent on hydroelectric power. In 2004, Iran opened its first wind-powered and geothermal plants, and the first solar thermal plant was to come online in 2009. Demographic trends and intensified industrialization have caused electric power demand to grow by 8 percent per year. The government’s goal of 53,000 megawatts of installed capacity by 2010 is to be reached by bringing on line new gas-fired plants financed by independent power producers, including those with foreign investment backing, and by adding hydroelectric and nuclear power generating capacity. Iran’s first nuclear power plant at Bushehr, built with assistance from Russia, was not online by 2006. In 2005 Iran’s electricity imports were greater than its exports by about 500 million kilowatt-hours; exchanges were made with all neighboring countries except Iraq.^[65]

Tourism

See also: Iran travel guide from Wikitravel

The "Gate Of All Nations" at Xerxes's palace, Persepolis.

The tourist industry declined dramatically during the war with Iraq in the 1980s but has subsequently revived. 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. 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. Several organized tours from Germany,France, and other European countries come to Iran annually to visit archaeological sites and monuments. The government reported that in 2004 some 4 million tourists, including over 2 million Iranians on vacation, spent nearly US$2 billion in Iran, an increase of 10 percent over 2003. However, in the early 2000s the industry still faced serious limitations in infrastructure, communications, regulatory norms, and personnel training.^[66]

Iran currently ranks 68th in tourism revenues worldwide. Iran with attractive natural and historical sites is rated among the 10 most touristic countries in the world. Close to 1.8 percent of national employment is generated in the tourism sector which is slated to increase to 10 percent in the next five years.^[67] Iranian hospitality is one of the unique and distinctive features of its people.