A Political Economy of the Middle East by unknow

Author:unknow
Format: epub
ISBN: 9780813349299
Publisher: Westview Press

Iran

By some measures, the Iranian economy has declined precipitously since the revolution. At the end of the Iran-Iraq War in 1988, per capita GDP was one-half of its 1977 level. Per capita incomes did not regain their prerevolution peak until 2004 (Salehi-Isfahani 2006). A combination of revolution, war, and collapsing oil prices ensured that the 1980s would see sharp declines in output. At the same time, population growth accelerated during the revolution (see Box 4.1). Despite the subsequent fertility revolution in Iran, the labor force grew at over 4% per year during the 1990s. Unsurprisingly, employment creation failed to match additions to the labor force. Measured unemployment rose from 10% to 14%, and more than two-thirds of new jobs created during the 1980s and early 1990s were in the public sector.

These failures need to be weighed against the dramatic improvements in a variety of human development indicators. Private consumption fell less than half as rapidly as per capita output (23% versus 50%) during the period 1977–1988 and grew more rapidly during 1997–2004 (4.6% per year) than during the boom years of 1960–1977 (Salehi-Isfahani 2006). The poverty rate fell from 47% in 1978 to 15.5% in 2001; half of the poor are covered by various government social safety net provisions (World Bank 2001a). As documented in Chapter 5, school enrollments of girls, including rural girls, boomed, infant and child mortality rates plummeted, and gaps between rural and urban human capital indicators narrowed. These improvements were driven by public investments in drinking water, schools, rural (and urban) health clinics, and public food subsidies (Salehi-Isfahani 2006).

As with all wars between modern nation-states, the Iran-Iraq War greatly stimulated the centralization of economic decisionmaking. The basic statist economic structures, already well advanced under the shah, were markedly enhanced. The government implemented price controls, rationing of consumer goods, a deliberately overvalued exchange rate, strict quantitative regulation of imports, and tight controls over banking. It also constructed the familiar regulatory maze for private investors, who needed to obtain numerous permits. In the wake of the revolution, some 580 companies, all of them medium- to large-scale enterprises, were nationalized.

Like most developing countries, Iran displays marked industrial dualism—a large number of very small firms coexisting with a much smaller number of medium- and large-scale enterprises. This division also nearly coincides with a private-public split; all large-scale industries and the large majority of medium-scale enterprises are run by public institutions. In 1990/1991 public enterprises accounted for 73% of industrial value added, 72% of employment, and 65% of investment (Amuzegar 1993). The revolution greatly increased direct state management of Iranian industry. Manufacturing output stagnated during the 1980s (actually declining at a rate of 0.1% per year, according to the World Bank [Amuzegar 1993]). Some industries fared far worse than this; automobile production in 1992 was only 15% of the pre-1979 level. Growth revived during the 1989–1992 period, when the manufacturing sector grew at double-digit rates. However, much of this growth was capital-intensive, and less than 10% of the new entrants to the labor force were absorbed during this period.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.