Iran’s economy is what you call a transition economy. The labor force is growing faster than the real economic growth which in turn is driving up the unemployment rate higher than the official estimate of 11%.1 According to experts, annual economic growth above five percent would be needed to keep up with the 900,000 people entering the labor force every year.
Government spending, as percent of overall budget, was 6% for health care, 16% for education, and 8% for the military from 1992-2000 and contributed to an average annual inflation rate of 14% in the period 2000-2004.1 Iranian budget deficits have always been a problem, mainly because of subsidies from the state totaling more than $80 billion for the energy sector alone in 2008 which is 80% of the government's budget.2 According to economic experts, Iran will need $70 to $75 a barrel for its crude to balance its budget in 2008-2009.2
The government is trying to diversify away from petroleum by investing in other areas of the economy such as automobile manufacturing, aerospace industries, consumer electronics, petrochemicals and nuclear technology. Also, Iran has a great potential for development in mining and tourism.3
Before the revolution, Iran's economic development was growing fast. Traditionally Iran was an agricultural society, but by the 1970s, Iran had significant industrialization and economic modernization. However, the pace of growth had slowed dramatically by 1978, just before the Islamic revolution.5
Iran's long-term objectives since the 1979 revolution have been economic independence, full employment, and a comfortable standard of living for its citizens, but at the end of the 20th century there were many obstacles to overcome.4 Iran's population more than doubled during that time, and its population grew increasingly young. In a country that has traditionally been rural, agricultural production has fallen consistently since the 1960s and by the late 1990s Iran was a major food importer.3...