Iran - Economic analysis of government policies, investment climate and political risk.






IRAN: Economic Policy Analysis

This site presents an analysis of the Iranian government's economic policies compared to a revised list of 34 economic policies as prepared by Persiancat with the McKeever Institute of Economic Policy Analysis (MIEPA) in Fall of 2013.

To read the analysis scroll through this site. To learn more about the background policies, click here: Introduction and Policy Recommendations

To learn more about MIEPA, click here Return to MIEPA's Home Page

The study is by Persiancat, an Iranian native who currently [December 2013] lives in San Francisco; this study presents the Iranian government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:


5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2012. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

Return to MIEPA's Home Page




        1               0.3           0.9             15.0        06 %

        2               0.2           0.6             15.0        04

        3               2.6           7.8             15.0        52

        4               1.5           4.5             15.0        30

        5               3.2           9.6             15.0        64

        6               2.0           6.0             15.0        40

        7               3.6          10.8             15.0        72

        8               3.8          11.4             15.0        76

        9               2.0           6.0             15.0        40

        10              0.1           0.3             15.0        02

        11              2.5           7.5             15.0        50

        12              0.5           1.0             10.0        10

        13              2.4           4.8             10.0        48

        14              1.5           3.0             10.0        30

        15              2.8           5.6             10.0        56

        16              2.8           5.6             10.0        56

        17              1.0           2.0             10.0        20

        18              0.0           0.0             10.0        00

        19              0.3           0.6             10.0        06

        20              0.5           1.0             10.0        10

        21              2.1           4.2             10.0        42 

        22              2.5           5.0             10.0        50

        23              2.0           4.0             10.0        40

        24              2.8           5.6             10.0        56

        25              2.0           4.0             10.0        80        

        26              2.3           4.6             10.0        46

        27              3.0           6.0             10.0        60

        28              0.5           1.0             10.0        10

        29              1.5           1.5              5.0        30 

        30              1.1           1.1              5.0        22

        31              2.3           2.3              5.0        46

        32              2.5           2.5              5.0        50

        33              3.3           3.3              5.0        33

        34              2.4           2.4              5.0        48

   TOTAL               63.9          136.5            365.0       37.4%
                      =====        ======            =====        =====


1. Freedom From Internal Control 0.3

Iran is a constitutional, Islamic Theocracy that bases its fundamental structure to the moral code and religious laws of Shari’a. Article 20, Iranian constitution states, all citizens of the country, both men and woman, equally enjoy the protection of the law while enjoying all human, political, economic, social, and cultural rights, in conformity with the Islamic criteria. Nonetheless the Constitution is a big contradiction because the government twists and bends its laws to benefit political and government agenda rather then the people. For example the An Iranian husband can have up to four wives, but adultery or the loss of "virginity" before marriage can literally become a death sentence for Iranian women.

Personal experience & professor of economics in Iran.

2. Freedom of Speech 0.2

The government allows itself to repeatedly shut down the newspapers, blogs, even the country’s Internet altogether. It is stated in the Iranian Constitution that publications and press have freedom of expression except when it is detrimental to the fundamental principles of Islam or the rights of the public. Iran's law against blasphemy derives from religious laws of Sharia. Most Blasphemers are usually charged with "spreading corruption on earth", or mofsed-e-filarz, which can also be applied to criminal or political crimes. The law against blasphemy matches laws against criticizing the Islamic regime, insulting Islam, and publishing materials that differ from Islamic standards. In other words freedom of expression and speech is only reserved for individuals who fully support the regime and its political and religious views.

3. Effective, Fair Police Force 2.6

The police force has become and instrumental in a self-propitiating cycle of kickbacks and cronyism as government exploits businesses and indivuals. Formed in the early 90’s the merge of Iran's Police Force and the Gendarmerie of Iran has more than 60,000 police personnel serving under the Ministry of Interior and Justice, including the border patrol personnel’s. When it comes to protecting businesses from criminals and burglars, the police force does a very good job but when it comes to dealing with individuals the police force invades their personal and moral choices through fear of punishment. Additional the police force has the tendencies to act biasedly toward businesses or individuals who have personal relationships or bribed the law enforcement with money towards the growth of the religious regime and/or certain political circles. Because of this self-propitiating cycle, individuals and businessman have little to no chance in disturbing or changing the statues quoe for the better. The peoples perception in regards to the government and the police force can be associated with the notion personal violation, for example men and woman who are not married are not allowed to walk together down a street or else the police will arrest them and charge a hefty fine.

4. Private Property 1.5

Iran’s private property laws are weak and the government has not shown any initiate to improve its policies. Judging by the International Property Rights Index (IPRI) Iran is tied with Libya for last position. The IPRI is based on three main components designed to measure the quality of property rights in a given country: 1) Legal and Political Environment, 2) Physical Property Rights, and 3) Intellectual Property Rights. Each of these main components is broken down into sub components that are averaged for Iran’s total IPRI score. A listing of the worst score of each sub component will be illustrative of Iran’s main weaknesses in upholding the hallmark of a civilized society; property rights. First, under “Legal and Political Environment” is “Political Stability” with a score of 2.1/10. Under “Physical Property Rights” is “Access to Loans” with a score of 2.4/10. And lastly, under “Intellectual Property Rights” is “Copyright Piracy” with a score of 0/10.

5. Commercial banks 3.2

The Iranian Government has moved towards liberalizing the banking sector but it has continued to enforce strict Islamic (Sharia) laws towards the banking principles and procedures. Commercial banks are authorized to accept checking and saving deposits and term investment deposits, and they are allowed to use promotional methods to attract deposits. In the year 1339 (1960) pursuant to the promulgation of the State Banking and Monetary law and the establishment of Bank Markazi Iran (The Central Bank), Bank Melli Iran relinquished its central banking functions. These developments enabled Bank Melli Iran to concentrate fully on commercial banking transactions to achieve further success by taking long strides on that front. Bank Melli, is the largest commercial retail bank in the middle east with over 3,000 branches, continues to follow the laws by only engaging in interest free Islamic transactions.

6. Communication system 2.0

Iran’s communication system is mainly stated owned and continues to be widely monopolized/administrated by two major companies. Both Established in the early 70’s, The Telecommunication Company of Iran (TCI) takes full responsibility of administration for the entire telecommunication affairs while the Telecommunication Industries (ITI), manufactures the required equipment for the national long distance network. According to the 2013 World Fact Book of the United States Central Intelligence, there are 27.767 million fixed telephone lines and 56.043 million mobile cellular. Compared to many of the other Middle Eastern countries, Iran ranks the highest. With a population of over 76 million of which 56% are under the age of 25, Iran is one of the first 5 countries in the Middle Eastern region to develop such a high rate of interweb users. In 2012, statistic established that Iran ranked very low when it came to Internet host (197,804) but ranked 35% much higher when it came to Internet user with over 8.214 million. The press/news source in Iran is privately owned and monitored by a special court who has the authority to monitor, suspend, revoke licenses of newspaper, journals, online blogs, ect, if found guilty of publishing antireligious material or information detrimental to the national interest. In 2012, during the elections the Internet and all landlines were shut down.

7. Transportation 3.6

Transportation services play a significant role in meeting the demands of its people and the demands of distribution of products for the business. Iran’s land transportation fleet with 236,000 vehicles is in charge of carrying 76 percent of the cargo and 24 percent of the passenger loads in the country. The Ministry of Road and Transportation is solely responsible for building new roads, railway tracks, airports, and marine transportation. With over 6,500 km of railroads of which 140 km is electrified the railroad system is administered and foreseen by the state railway company of the Islamic Republic of Iran. Iran has 324 airports total, 136 paved runways, 188 unpaved. The government has also planned to increase the capacity of container loading and unloading from 4.4 million to 7 million by the end of 2015. Iran’s most expanded and sole flag carrier is Iran Air (Homa) who has been estimated to provide air transportation to 5.8 million passengers inside and 1.4 million outside the country annually. Tehran’s (capital of Iran) metro system transports 2.5 million people daily in the city and other metro systems are expected to become operational in other major cities such as Shiraz, Esfahan and Tabriz. Sun May 1, 2011 7:37PM Jul.2000, No.192 By: Malek-Reza Malekpour

8. Education 3.8

Education in Iran is highly centralized and divided into K-12 education and higher education. Iran’s Ministry of Education supervises the logistics of primary, secondary, and high schools vs. the Ministry of Science and Technology who manages universities. Attending a primary, secondary, and high school in Iran is mandatory under the constitution but furthering education such universities or vocational schooling is not. Higher education at certain colleges can be free but attending a private or a well-known university is not. The most popular fields of study for many Iranian students are engineering and construction 31%, social science 23%, business and law 23%. In 2004 it was calculated that 85% of the Iranian adult population was literate and well ahead of the regional average of 62%. In 2010, more than 64% of the country’s population was under the age of 30, with approximately 92,500 public educational institutions at all levels, with a total enrollment of approximately 17,488,000 students. This rate increased to 97% among young adults between the ages of 15 to 24. Each year, 20% of government spending and 5% of GDP goes to expanding and providing modern ways of teaching for schools, compared to many of the other developing countries, Iran has a very high rate. The largest and most prestigious public university is the University of Tehran and the largest private university in Iran is the Islamic Free University. page 132

video :

9. Social mobility 2.0

Iran’s social classes can be divided up between the upper class, middle class (about 32% of the population in 2000), working class (about 45% of the labor force), and the lower class. Before the revolution the upper classes consisted of many of the same social groups as the elite, many of which were landowner, industrialists, financiers, and large-scale merchants. After the revolution many of the upper class, which associated with the Shaw, migrated out of the country leaving behind assets that the Islamic regime confiscated. The structure of the middle class did not change significantly, but its size doubled from about 15% of the population in 1979 to more than 32% in 2000. Not very much different than many other countries, social statues, associating with the Islamic regime, or even coming from a family who was involved in the revolution can increase an individuals potential to succeed and attend competitive university. There’s currently a widespread problem that troubles much of the younger generation who recently graduate and still struggling to make it in the work force. Connections with the political structure or religious and business circles can help but these connections are difficult to obtain by many students who are leaving in rural city far away from Tehran. Unlike America, going from nothing to something is very uncommon in Iran. page 104

10. Freedom From Outside control 0.1

Since 2006 a sanction was implemented by the United Nations and the European Union to stop Iran from abusing their nuclear power plants to create Nuclear Weapons. Unfortunately a sanction was placed against Iran once before in 1979 when the Islamic revolution posed a threat of supporting terrorism. The regimes radical behavior has left a crippling consequence on both its economy and its population of 78 million. Many Iranians feel belittled, embarrassed, and stressed about living in a country where its government continues to abuse its people and resources. The current inflation rate is at 40%, destroying the value of its currency. With the current appointment of President Rohani, Iran’s legislation has finally decided to comply with the terms set by the United Nations, to freeze the Iranian nuclear program. In return Iran will receive 7 billion dollars of relief of which 4.2 billion will come from direct revenue collected by the sales of oil. The United States will allow Iran to trade in gold and other metals, but the White House advised that Iran would receive no economic benefit from this deal because they will not be allowed to use oil money for obtaining gold. Further more Iran will be allowed to unfreeze $400 million of its investments to support paying tuition for over 8,700 Iranian students who are currently studying abroad. Every transaction and payment will be closely monitored and tightly controlled, making sure that Iran stays true to its promise.

11. Protection of Domestic Enterprise 2.5

Iran has many exporting good such as rugs, precious stones and gold, but the three main industries, which run the economy, are oil, natural gases, and automobiles. In 2010 Iran had 58.97 billion dollars of imports and 84.31 billion dollars in exports. Monopolized by the government, the oil and gas industry accounts for 80% of the exports. With 10% of the countries GDP, Iran is the 12th largest automaker in the world competing with countries such as Taiwan, Romania, and India. To protect the car industry, the Iranian government set a 100% tariff on all of the imported foreign cars, which later was proven a failure. The laws quickly reduced tariffs from 20-90% directly increasing imports from 184 million in 2002 to 1.5 billion in 2007. It may seem that high tariffs and restrictions will benefit Iran’s economy but in reality the consequences create an increased profit margin for illegal imported goods. As of 2010, Iranian customs reported that 14.43 billion dollars worth of goods were smuggled in and out of Iran leading to loss of over 600,000 jobs.

12. Foreign Currency Transaction 0.5

In accordance with the Iranian calendar the fiscal year begins on March 21st and ends on March 20th the next year. The Ministry of Finance and Economic Affairs is the government agency authorized to levy and collect taxes. The national currency used in Iran is Rial; all other foreign currencies must first be transformed to rial for any legal transactions to take place. Unfortunately this law is not followed, many business and individuals would rather accept dollars and euros due to the decrease value of the rials currency. In implementing monetary policy, the Central Bank can directly resort to its regulating power or affect money market conditions indirectly as issuer of high-powered money.

13. Border Control 2.4

Drug trafficking and smuggling of imported goods has become a major challenge for the Islamic Republic of Iran. The geographical location of the country, specifically 1,923 km of eastern border of Pakistan and Afghanistan have posed threats of continues illegal imports of drugs such as opium, cannabis, heroin, and high purity of crystalline methamphetamine. According to the United Nations Office On Drugs and Crime, Iran has built and enforced one of the strongest counter-narcotic enforcements in the regions bordering those two countries. Sadly in 2011 Iran accounted for the record rate of opium seizures (80%) in the world, as well as heroin and morphine seizures (30%). In addition to the drug trafficking, there have been estimates of 5.5 to 6 billion dollars of smuggled imported goods through the borders of Iran. Although modernizing the customs and techniques have been placed to prevent the smuggling, In 2012 police enforcement calculated about 16 billion dollars worth of goods were imported illegally which 12 billion dollars were items which are illegal to have or own in Iran, and the remaining 4 billion dollars being legal goods that individuals can own but were brought into the country without accountability. According to Iran’s Border police, the government has decided to allocate 30 million dollars toward border security and sealing of the southeastern provinces of Sistan and Balouchestan, by the end of March 20,2014.

14. Currency 1.5

Iran’s unit of currency [RIAL] substantially started to decline after the Islamic revolution in 1979. Issued by the central bank of the Islamic Republic, the current value of 1 US dollar stands at 30,000 rials. The currency lost more than half its value the year before President Hassan Rouhani’s election in June 2013, mainly because of the sanctions denying Iran access to the world financial system. The currency rate has negatively effect the society as a whole, normal household goods are so overly priced that many families cannot afford to stay a float, as a direct result many small businesses have shut down, and many new investors have stopped furthering projected plans due to the economical downfall.

15.Cultural, Language Homogeneity 2.8

The main ethnic groups in Iran are Persians 65%, Azerbaijani Turks 16%, Kurds 7%, Lurs 6%, and Arabs 2 %. Turkish tribal groups such as the Qashqai 1%, and non-Persian, non-Turkic groups such as Armenians, Assyrians, and Georgians are less than 1%. Persian, the of?cial language is spoken as a mother tongue by at least 65% of the population and as a second language by a large proportion of the remaining 35%. Other languages spoken are Azeri Turkish and Turkic dialects, Kurdish, Luri, Arabic, and Baluchi. Centrally located in the Middle East, bordering the Gulf of Oman and the Persian Gulf in the south and the Caspian Sea in the north. Iran covers an area of 1.648 million square kilometers (636,296 square miles) and is bordered between Iraq, with which it shares a border of 1,458 kilometers (906 miles), and Pakistan and Afghanistan in the east, with which Iran has 909 kilometers (565 miles) and 936 kilometers (582 miles), respectively, of common borderline. Iran also shares 499 kilometers (310 miles) of borderline with Turkey, 992 kilometers (616 miles) with Turkmenistan, 432 kilometers (268 miles) with Azerbaijan, and some 35 kilometers (22 miles) with Armenia, the latter 3 states formerly being part of the USSR. It is very common that different regions of Iran will have bias opinions about each other, for example people from bordering city of Iran will associate people living in the capital city Tehran as snobby and disrespectful. And interesting enough certain people living in Tabriz for example will refrain on doing business with people from Isfahan.

16. Political effectiveness 2.8

When it comes to finding a solution to predicaments such as natural disaster and potential terrorist attacks, the Iranian Government can be very creative but when it comes to solving political issues within its borders or with foreigner affairs they can be rather ineffective. Incase of natural disaster the Basij (voluntary armed force), the army, and the Helale Ahmar (equivalencies to the red cross) are quick to respond with strategic plans on reaching all province of Iran. But political ineffectiveness can be realized at times such as destructive 6.6 earthquake that erupted in Bam resulting death tolls of 26,271 and leaving 30,000 in critical conditions. Although the Iranian government had not complied with the earthquake regulations set in 1989, with the help of international organizations and collaboration, the Iranian government finally created a framework to systematically rebuild the city.

17. Institutional stability 1.0

The government controls many of the influential institutional organizations in Iran and due to the complexity of the political structure they tend to create many disturbances for the society. Individuals who are appointed to lead these institutional organizations follow the Islamic Regime so they bend the rules to create forceful guidelines everybody to follow even if it doesn’t necessarily benefit the society or free market in a positive way. For example, female retail clothing stores can only sell certain types of clothing adhering to the Islamic dress code, cafes will be fined if caught serving to females who smoke cigarettes, woman are not allowed to attend any official outdoor sport stadium match, schools are subjected to change, modification and at times deleted curriculum based on the governments request.

18. Honest Government 0.0

Unfortunately the Iranian Government suffers from major levels of corruptions. Leaders who have been appointed by the Islamic Regime would rather be dictators then a form of representation for its people. The local officials are mainly looking out for their own profit, power, and safety. This dishonest government has left the society under critical confusion, distrust, and despair. During Iran’s 10th presidential election on June 12, 2009, the Iranian government fraudulent changed the votes to favor Ahmadinejad, resulting in furious reactions of the Iranian people who had voted for the independent reformist party. This Upheaval turned into daily protest of millions of Iranians in every city around the world radicalizing and demanding a total regime change and departure of Khamenei from power. These peaceful protest were disturbed by vicious, violent, fearful backlash of the national police force, killing hundreds of protestors, shutting down universities and schools, disabling internet/phone access with the rest of world. Mortazavi is a former prosecutor of the Revolutionary Islamic Courts who had been dismissed in 2009 following accusations of torturing prisoners. In 2010 the Iranian parliament published the findings of an investigation into the death of protestors arrested following the 2009 presidential elections. The report identified Mortazavi as responsible for the death of three political prisoners at Kahrizak detention center and the abuse of dozens of others. By February 5 Mortazavi was in prison awaiting another trial! This is another example of corruption within the Iranian Islamic Courts.

19. Common Laws 0.3

The Iranian constitution was adopted in 1979 and amended in 1989. Any Piece of legislation that is proposed to the parliament must first be approved by all of the 12 highly conservative Guardian Council (Shoraye Naegahban) members. The Guardians have the authority to veto legislation and laws that are judged to be inconsistent with the Shari’a in other words the Islamic Law. The flawed system allows certain religious circles to lobby and advocate for laws constricting much of the society basic human rights such as freedom of expression, freedom of speech, and freedom of liberty. It is very common for the police force and judiciary system to create secrete bargains, and plans of affecting its society. For instance a woman was blinded and critically hurt after a man poured more than a gallon of sulfuric acid on her body, so in return the Iranian government saw fit that the only form of punishment should be an eye for an eye based on the Islamic Criminal Code in Iran, under Islamc sharia law for the infliction of equal bodily harm on an aggressor. As much as this may sound fair, this issue caused major horrific reactions by the rest of the world equating with torture, cruel and unusual punishment and medical malpractice.

20. Central Bank 0.5

The Iranian central bank is directly under the control and influence of the government, implying that the policies and laws of the Islamic Regime play a major role on the operations and management of currency and the commercial banking system. In 2012 allegedly two senior central bank officials were arrested for the $3 billion Bank Sedarat embezzlement scandal, which was the largest in the history of Iranian banking. This case resulted in death sentences for those who did not have immunity, highlights the cronyism and impunity for which Ahmadinejad’s inner circle has a reputation. Much of the public news and discussion inside of Iran blames its economic failings on sanctions and international isolation, rather then its own corruption. In 2008 Iran’s former central bank governor accused the Mahmoud Ahmadi-Nejad of “looting” the bank’s assets for personal profit, and exploiting peoples deposits to curb the inflation rate. The Iranian government does not effectively monitory the commercial banks or its central banking system but rather abuse its power.

21. Domestic Budget Management 2.1

Management and Planning Organization of Iran (MPO) is the largest governmental establishments of Iran. From 1948 until 2007 and again since 2013, the organization was fully responsible for preparing the budget. Formerly known as the Plan and Budget Organization (PBO), the MPO had a variety of goals and duties, including the evaluation of the country's resources, the preparation of its medium and long term development plans and policies, the preparation of annual budgets, and the monitoring and evaluation of work done under the implemented plans. July of 2007 the organization was dissolved by president Mahmoud Ahmadinejad, who believed he could manage/budget everything himself unfortunately the budgets where ruined and many constituents blamed his presidency for the high inflation rates of 32.13%.

The Taxation system in Iran is an indirect system and for the same reasons it’s not transparent enough. The only case where the law stress on collection of direct tax is the tax on employees’ salaries and worker wages. Iran’s tax system is divided into five categories which are; 1.Taxes on Companies, 2.Occupation Taxes, 3.Taxes on Salaries, 4.Consumption and Sales Tax, 5.Imports. Based on classification of the budgeting system, company taxation is divided into 2 groups of taxes on the governmental and nongovernmental companies. According to the article 4 of the public auditing law, all companies are 50% owned and controlled by the government and can be considered as governmental companies. There are 2 types of Nongovernment companies: Namely private and public companies. Public companies benefit from governmental facilities, and are under government supervision at all times. According to the Economic profile conduct this year, the GDP purchasing powers are as stated 1.016 trillion (2012 est.), $1.035 trillion (2011 est.), $1.005 trillion (2010). In 2011, the total revenue was declared as $131.2 billion, the total expenditures were $92.63 billion and lastly the budget surplus was about 7% of GDP.

22. Government Debt 2.5

The Central Bank of Iran reports the government debt to GDP and since the 1970’s the debt has continuously fluctuated, creating an unbalance within the economy. According to the Trading Economics report, in 2010 Iran’s GDP was estimated at 496.243 billion US dollars. In 2012 Iran recorded a government debt to GDP of 10.30% the country’s GDP. According to the Index Mundi, the external debts estimated at $19.11 billion in 2011 and $14.84 billion in 2012. In 2005 Iran’s GNP distribution ranked 33rd at $187 billion.

23. Economic Statistics 2.0

The lack of statistical information available to the Iranian people and foreign investors creates an increased risk of potential new business ventures. There for the economy stays stagnant without any signs of improvement. The only organization that has constant access to the national census data is the government. It is very common for business owners to invest then fail due to minor and major mistakes during the initial market analysis. The lack of accurate/current data information about the population provided, disables the local business owners from properly understanding the needs, the wants, the demographics, the past trends, and many more details needed to create a successful business plan.

24. Protection of Public Health and safety 2.8

Although the public health statues of Iran has significantly improved over the years there are still major issues affecting the society as a whole. For instance an estimated 50,000 tons of trash is produced in the country on a daily bases but only 70-80% is hygienically disposed. There is also a considerable shortage of wastewater treatment meaning that much of the raw sewage is being injected directly into the groundwater, causing a water crises as well as an increase of health issues. The average death age in Iran can range anywhere from 73-75 years, and the average infant mortality rate in 2012 was estimated at 42.11 which is very high compared to many other developed countries. In 2005 two-thirds of the official total of 9,800 HIVcases were attributed to an increase usage of drugs. The Iranian government established a national HIV treatment system, by creating 150 testing sites through out the country and offering free needle exchange programs.

25. High Wage Policies 2.0

The Iranian government sets the annual increase or decrease of the minimum wage. All workers and employers must adhere to these rules or else the Sharia Law will subject them to punishment. After the 2009 election, the minimum wage became the lowest that it had ever been, approximately $303 per month. Due to the high inflation rate and the crash of the Iranian economy the minimum wage in March 2013 was decreased too $140 per month. According to the metalworker-cum-trade-union activist in Tehran, Industry owners and economic institutions are using the reduction in demand/reduction of profitability to refrain from paying workers the rightful wages they are supposed too. The economical instability has transferred all of the pressure on the hardworking middle and lower class. If layoffs, unpaid wages and high inflation weren’t bad enough, the government authorities have created systematic repression procedure, prosecution, and imprisonment of labor activist to prevent the formation of labor unions.

26. Environmental protection 2.3

Burdened with numerous environment concerns such as water/soil contamination, destruction/over-exploitation of natural resource, overgrazing/farming, and deforestation, air pollution in Iran is still the number one environment dilemma due to the emissions from vehicle exhausts. According to the World Bank, Iran’s economy estimates losses base on the death cause by air pollution at $640 million, which can be translated to 5.1 trillion rials of 57% of GDP furthermore the diseases inflicted with air pollution estimate losses at $260 million per year or 2.1 trillion rials or 23% of the GDP. There have been plans to replace existing public transportation buses with natural gas infused buses. The government has joined together with EPO (environmental protection organization) to create an executive measuring technique to control the pollution levels exerted by the smog.

27.Strong Army 3.0

The national army can be describes as the one of the countries strengthening points. The establishment of the national army can be dated all away back to the Persian Empire, when the empire ruled the majority of the Middle East. The Islamic Republic of Iran Army (IRIA) is the ground force of Military of Islamic Republic of Iran. In Iran, it is also called Artesh, which in Persian is directly translated to "army." According to Center for Strategic and International Studies, as of 2007, the regular Iranian Army was estimated to have 350,000 personnel (220,000 conscripts and 130,000 professionals) plus around 350,000 reservists for a total of 700,000 soldiers. The Conscripts (the young men who graduate from high school) are forced to serve for 18 months and have professional military training, in case of drafts. Iran has two parallel land forces with some integration at the command level: the regular Artesh (Army), and the Army of the Guardians of the Islamic Revolution, also known as the Sepaah (IRGC). Iran is also the only country whose executives do not control the armed forces, meaning that the president is solely responsible as the nominal ruler over the Supreme National Security Council and the Ministry of Intelligence and Security.

28. Foreign Trade impact 0.5

In 2011 Iranian exports amounted fro 23.77% of the GDP, the share of the imports was 16.5% of the GDP. By adding these two figures together the total foreign trade becomes 40.27% of the 2011 GDP. Due to several major disputes such as the 1979 hostage crises and the suspicious development of nuclear weapons in Iran has lead to major tension between the U.S and the Iranian government. Although the Iranian government says that its nuclear power plants are meant only for peaceful purposes the UN placed a sanction. Since Iran heavily relies on foreign trade of Oil and Mineral Resources, the recent sanctions have really impacted the business growth in a wide scale. In the past two months the President Obama and President Rouhani have come to an agreement only if Iran retains the technology and material to produce fuel for a weapon for now. In return for the interim deal, the United States has agreed to provide $6 billion to $7 billion in sanctions and roughly $4.2 billion would be from oil revenue that has been frozen in foreign banks. The Iranian government has finally started to take logical steps towards creating secure relationships with foreign governments but the Iranian society still questions whether they will keep up the change or not.

29.Management of Foreign Currency 1.5

Oil revenues in the mid-1970’s brought Iran a foreign exchange surplus. But when the oil revenues fell sharply in 1987, an economic crisis resulted. Iran had gone from being a long-term lender in 70’s to a short-term borrower in the 1980’s. In 2011 the total GDP four the country was estimated at $357.2 billion, in the same year Iran earned $84.92 billion from exports such as oil (more than 80%), cement, fabrics, foods, fruits, iron ore, coal, medicine, and construction materials. This number was equal to 23.77% of the 2011 GDP. Iran also spent 58.97 billion dollars on imports, which mostly included agricultural goods, IT / telecom, construction materials, industrial equipment and chemicals. As the political tensions alongside sanctions and inappropriate economic policies led to the collapse of the rial on the free market, and the rate grew to as high as 40,000 rials to the dollar in 2012. The recent agreements and positive news on the diplomatic front, the Iranian business communities is finally starting to generate optimistic views on the economy but the concerns about the emerging foreign exchange policies created by the Central Bank of Iran is keeping everyone on edge.

30. Layers of Collective Action 1.1

There are many collective enterprises in Iran mainly associated with the Islamic Regime. In Iran many of the appointees of the local government are either preselected by the current rulers, are individuals with capital leadership, or the local religious leader. Through the social changes made after the revolution, and the current state of affairs many of the poor and wage-earning class workers reacted to their economic disenfranchisement through an alienation process of internalization and the formation of non-collective survival mechanisms. According to the government and the Sharia Law these individuals can be classified as terrorist to the current society.

Interview with Cousins living in Iran

Social Change in Iran by Behzad Yaghmaian (Jan 24, 2002)

31. Pro Business Climate 2.3

There are about 8 procedures that must be fulfilled in order for a new business to establish in addition a potential entrepreneurs must have an accumulative amount of money must be set aside in order to pay for the associate cost. The traditional form of a market of a business can be translated as “bazar”. The businessmen who operate these shops usually belong to influential groups of the community. A typical entrepreneur may not have an academic degree in the industry they work in but they prosper by the knowledge that has been handed down to them by their families. Traditionally the society gives these people a lot of respect, and high status. Although these businessmen might not be stereotyped as philanthropic nowadays, they still receive high degrees of respect from all classes of society, and this respect is due to the power that accompanies wealth.

Interview with my uncle, who is a businessman in Tehran.

32. Government Enterprises 2.5

According to article 44 of the Iranian constitution stipulates that the country’s economy should consist of state, cooperative and private sectors based companies. Although it may seem that the article favors all of these different sectors, its still primarily favors the public ownership of most of the economical impacting business. The largest companies in Iran are mainly government enterprises. In 2004 an amendment to the constitution allowed 80% of the state assets to be privatized, 40% of these sales were through the “justice shares” scheme and the rest through the Tehran stock exchange. Establish in 1948, The National Iranian Oil Company (NIOC) ranks the worlds third largest oil company in the world and is currently under the direction of the Ministry of Petroleum of Iran. Bank Melli Iran (BMI) is the 5th largest government owned company, which is directly controlled by the order of the Majlis (the Iranian parliament).

33. International Security Agreements 3.3

A mutual aid treaty can be defined as a formal agreement between two or more states, as in reference to terms of peace or trade. In 2006, Iran and Syria signed a mutual defense treaty in response to the growing possibility of conflict with the West. Both of these countries were highly inclined to fulfill the treaty, and it seemed that Iran was already doing so, at least financially, as Syria spiraled into a civil war. During the 2012 conflict between and the U.S and Iran, the Russian President Rogozin stressed, “Iran is our close neighbor, just south of the Caucasus. Should anything happen to Iran, should Iran get drawn into any political or military hardships, this will be a direct threat to our national security. This just proves the strong relationships the Iranian government has with its bordering countries. In the past couple months Iran finally gave into the new deal to stop the production of their nuclear program proposed by six world powers.

34. Protection of Domestic Enterprises from Government Mandates 2.4

At the end of the Iran-Iraq war in 1989, a movement called the ‘Economic Adjustment’ was created to help transfer a majority of the economic productive units to the entrepreneurs of the private sector. Despite the movement the economy continued favor the public sector, which means that, more then 50% of the economy was centrally planned. Due to the current politic affairs Iran is sanctioned from the United Nations and is only importing and exporting from China and most of the Arabic countries such as Lebanon, Syria, Palestine, Iraq, Saudi Arabia and Venezuela (supports the Iranian regime). The current state of affairs has led to closure of many manufacturing companies and small business resulting to major unemployment. Many of the factory owners are changing employees from fulltime to freelance contractors to reduce costs. From the most recent Iranian censuses from 2006 to 2011 showed a substantial increase in the unemployment rate of prime-age (20-54) workers from 11.5 to 15.4 percent. The majority of Iran’s population lives below the 15%-20% poverty line. And due to the lack of authority many of the wealthier business owners are not following labor laws, exploiting their employees without any consequence just because they are well connected with the government.

Brookings Institute, Djavad Salehi July 23, 2013, viewed 10.8.13


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