Iran is a large country within the Greater Middle East and is part of the South-Central Asian Union, between the Gulf of Oman, the Persian Gulf, and the Caspian Sea. It is bordered by Iraq to the west, Turkey, Azerbaijan’s Naxcivan enclave, Armenia, and Azerbaijan to the northwest, Turkmenistan to the northeast, Afghanistan and Pakistan to the southeast. Known as Persia until 1935 in the western world, whereas the indigenous name has been Iran forever. Iran became an Islamic republic in 1979 after the ruling Shah was forced into exile. Conservative clerical forces subsequently crushed Westernisation and also any liberal or left-wing influences. Key current issues affecting the country include the pace of accepting outside modernising influences, reconciliation between clerical control of the regime and popular participation in government, and widespread demands for reform. Inflation and unemployment (particularly among youth) are major economic challenges.
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. In 2014, GDP was $404.1 billion ($1.334 trillion at PPP), or $17,100 at PPP per capita. Iran is ranked as an upper-middle income economy by the World Bank. In the early 21st century, the service sector contributed the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. The Central Bank of the Islamic Republic of Iran is responsible for developing and maintaining the Iranian rial, which serves as the country’s currency. The government doesn’t recognize trade unions other than the Islamic labour councils, which are subject to the approval of employers and the security services. The minimum wage in June 2013 was 487 million rials a month ($134). Unemployment has remained above 10% since 1997, and the unemployment rate for women is almost double that of the men. In 2006, about 45% of the government’s budget came from oil and natural gas revenues, and 31% came from taxes and fees. As of 2007, Iran had earned $70 billion in foreign-exchange reserves, mostly (80%) from crude oil exports. Iranian budget deficits have been a chronic problem, mostly due to large-scale state subsidies, that include foodstuffs and especially gasoline, totaling more than $84 billion in 2008 for the energy sector alone.]In 2010, the economic reform plan was approved by parliament to cut subsidies gradually and replace them with targeted social assistance. The objective is to move towards free market prices in a 5-year period and increase productivity and social justice.
Tehran is the economic center of Iran, hosting 45% of the country’s industries. The administration continues to follow the market reform plans of the previous one, and indicates that it will diversify Iran’s oil-reliant economy. Iran has also developed a biotechnology, nanotechnology, and pharmaceutical industry. However, nationalized industries such as the bonyads have often been managed badly, making them ineffective and uncompetitive with years. Currently, the government is trying to privatize these industries, and, despite successes, there are still several problems to be overcome, such as the lagging corruption in the public sector and lack of competitiveness. In 2010, Iran was ranked 69, out of 139 nations, in the Global Competitiveness Report. Iran has leading manufacturing industries in the fields of automobile manufacture, transportation, construction materials, home appliances, food and agricultural goods, armaments, pharmaceuticals, information technology, and petrochemicals in the Middle East. According to the 2012 data from the Food and Agriculture Organization, Iran has been among the world’s top five producers of apricots, cherries, sour cherries, cucumbers and gherkins, dates, eggplants, figs, pistachios, quinces, walnuts, and watermelons. Economic sanctions against Iran, such as the embargo against Iranian crude oil, have affected the economy. Sanctions have led to a steep fall in the value of the rial, and as of April 2013, one US dollar is worth 36,000 rial, compared with 16,000 in early 2012.[ In 2015, Iran and the P5+1 reached a deal on the nuclear program that removed the main sanctions pertaining to Iran’s nuclear program by 2016.
Although tourism declined significantly during the war with Iraq, it has been subsequently recovered. About 1,659,000 foreign tourists visited Iran in 2004, and 2.3 million in 2009, mostly from Asian countries, including the republics of Central Asia, while about 10% came from the European Union and North America. Since the removal of some sanctions against Iran in 2015, tourism has re-surged in the country. Over five million tourists visited Iran in the fiscal year of 2014–2015, four percent more than the previous year. Alongside the capital, the most popular tourist destinations are Isfahan, Mashhad, and Shiraz. In the early 2000s, the industry faced serious limitations in infrastructure, communications, industry standards, and personnel training. The majority of the 300,000 travel visas granted in 2003 were obtained by Asian Muslims, who presumably intended to visit 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 the UNESCO and the deputy head of research for Iran’s Tourism Organization, Iran is rated fourth among the top 10 destinations in the Middle East. Domestic tourism in Iran is one of the largest in the world. Weak advertising, unstable regional conditions, a poor public image in some parts of the world, and absence of efficient planning schemes in the tourism sector have all hindered the growth of tourism.
Iran holds 10% of the world’s proven oil reserves and 15% of its gas. It is OPEC’s 2nd-largest exporter and the world’s 4th oil producer.
Iran has the world’s second-largest proved gas reserves after Russia, with 33.6 trillion cubic metres, and the third-largest natural gas production after Indonesia and Russia. It also ranks fourth in oil reserves with an estimated 153,600,000,000 barrels. It is OPEC’s second-largest oil exporter, and is an energy superpower. In 2005, Iran spent US$4 billion on fuel imports, because of contraband and inefficient domestic use. Oil industry output averaged 4 million barrels per day (640,000 m3/d) in 2005, compared with the peak of six 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 2004, a large share of Iran’s natural gas reserves were untapped. 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% was based on natural gas, 18% on oil, and 7% 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. Iran is the world’s third country to have developed GTL technology.
Demographic trends and intensified industrialization have caused electric power demand to grow by 8% 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, and adding hydropower and nuclear power generation capacity. Iran’s first nuclear power plant at Bushire went online in 2011. It is the second nuclear power plant ever built in the Middle East after the Metsamor Nuclear Power Plant in Armenia