Iranian economy Essay Example | Topics and Well Written Essays - 2250 words

Iranian rescue - Essay ExampleThe performance of the Iranian economy in the early twenty-first century has witnessed a attach deterioration, in absolute terms as well as relative to other countries in the region. The growth of the economy has slackened drastically (Ramin, 2004). The economy, with a rapidly expanding population, has see a marked decline in investment, low labor productivity, a widening trade gap, a fast accumulation of debt and, above all, a incisive decline in the standard of support. What are the determinants of economic performance? There is broad agreement among economists that macroeconomics stability characterized by moderate and predictable inflation, a weakened budget deficit, and the relative stability of the real exchange rate is essential for long-term economic growth (Sciolino, 2005). Several empirical studies suggests that stable prices, a sure exchange rate that does not discourage exports and good fiscal and monetary disciplines are necessary, though not sufficient, conditions for a sustainable improvement in living standards. Viewed from this perspective the deterioration of in the performance of the Iranian economy since 1980 can be largely explained by the macroeconomic stability that has characterized this post revolutionary completion (Sciolino, 2005).The theme of this proposal is centered on the role of the give in in the process of economic and social development in the post revolutionary period. The emphasis, however, is on economic performance.... there is general consensus amongst close observers of the Iranian economy about the decisive historical role of the state. Furthermore, a distinctive feature of the current Iranian state is that sizeable oil revenue accrues to the government because of its monopoly right over oil. The rentier nature of the state provides it with economic power and financial independence, although the state plays a central role in distributing this wealth to the population through dir ect subsidies and the creation of economic activities.2. Irans Economy in a Comparative Context There has been a notable deterioration in the growth performance of the Iranian economy since the late 1980s, both relative to its past performance and compared to international standards. This is reflected in the below table, which shows proportional per capita GDP trends for Iran and United States. Though the comparison does show a major difference, it is to be noted that here we have compared a lower middle income economy to a higher economy.Table Comparative Figures of Iran and US Economy for the years 2003 - 2005Source World Bank Data Banks.3. Economic Policy and Industrial twistThe rapid growth of the Iranian economy during the two decades preceding the 1979 Revolution took place in the context of an import substitution industrialization strategy. The paradoxical return of this strategy was to make the economy increasingly dependent on oil export revenues in order to finance the intermediate and capital goods imports needed by Irans heavily protected industrial sector (Halliday, 1979). In the immediate aftermath of the revolution a considerable portion of large-scale modern industry, and the entire banking and damages