The Iranian Economy

Definition

 

The Concept 'The Iranian Economy' refers to the main characteristics of Iran's current economic situation, its major institutions and the political trends affecting it.

Principles of the Economy

The Constitution of the Islamic Republic of Iran stresses two key principles: ​​

  • Islamic Justice – Islamic law and tradition promote the provision of basic necessities, employment and leisure to all people, and forbids risk-taking and wealth aggrandizement. According to this approach, growth is not the highest priority.​

  • Self-sufficiency – In order to ensure the 'independence' of the national economy, foreign ownership is strictly curtailed.

These principles manifest themselves in a government controlled economy divided between the state-owned and cooperative sectors. The state-owned sector assures independence and the cooperative sector distributes goods and services in accordance with the tenets of Islamic Justice.


Major Players in Iranian Economy

The Iranian economy is dominated by the state. Private production is absent, and private investment is substantially limited.

 

Three major players dominate Iran's economy:​​​

  1. State-Owned Industry – Estimates vary, but up to 60% of Iran's production, including all large industries, is in state hands. State-owned firms are charged with meeting production targets set by the Majlis (the Iranian parliament).

  2. Bonyads or Islamic charities are the cooperative sector of the Iranian economy. They control a substantial portion of the non-oil economy, and are considered to be largely inefficient. They receive government subsidies and tax benefits, and answer directly to Iran's Supreme Leader.  

  3. The Bazaar is responsible for import, export and retail trade within Iran. The bazaaris wield considerable influence over economic policy. However, their market share is thought to have fallen as industrialists and financiers in the state-owned sector have usurped many traditional import/export channels.

Tags

IDF, Emergency Preparedness, Gulf War, National Security Council, Home-front Command

2006-04-01

Concept Paper

National Security

Regional Security

Iran suffers from inflation, unemployment, and poverty. The government compounds the problem with structural deficits.

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