The economy of Iran is a mixed economy with
a large part going to the public sector. It is the world’s
eighteenth largest economy when it comes to
purchasing power parity. About 60 percent of it is the
centrally planned economy. A large part of the economy is formed by
oil and gas production and with about 10 percent of the world’s confirmed oil
reserves and 15 percent of the gas reserves, Iran is largely regarded
as an energy superpower. Iran’s economy is categorized by
agriculture and services, hydrocarbon sector, and a clear state presence in
manufacturing and financial services. Freedom score In 2018, Iran’s economic
freedom score has been 50.9, and it has been ranked at
156 as the freest economy. Its complete score has
improved by 0.4 points, with nice improvements in financial
freedom, labor freedom, and government reliability compensating
lower scores for the fiscal state, government expenditure, and
judicial effectiveness indicators. Iran has been placed on 13th position among
14 countries of the Middle East and North Africa region, and its
overall score is lower than the regional and
world average scores. Background Information Before 1979, the economy
of Iran was one of the most forward-thinking
economies in the Middle East. However, from then on it has been
beleaguered by maladministration, international sanctions, political
corruption, and regional strains. The oppressive Islamic
government is controlled by Shiite
religious establishments. An uninfluential president is chosen
for a term of four-year through a process which is controlled by the
clerics with hard-line approach clerics. President Hassan Rouhani was
re-elected in 2017, since then he has tried to navigate a realistic
and less quarrelsome route. However, the Supreme Leader,
Ayatollah Ali Khamenei, is continually endorsing
radical strategies. Iran owns the world’s
second-largest natural gas reserve and fourth-largest
crude oil reserves. Rule of Law Even though Iranians have
the allowed to own the property and establish
their private businesses, the government has a very
overriding role in the economy and can actually
take away the property. The judicial system of Iran is not
self-governing and it is used to silence the criticizers and
members of the opposition party. Corruption is prevalent at all levels
of the government administration. The hard-line clerical
organizations and their tax-exempted fundamentals
are never examined. Tax and GDP The rate for personal
income tax is 35 percent. The rate of corporate tax
is 25 percent and all property transfers are
bound by a standard tax. The total tax burden is 7.1 percent
of total domestic revenue. In the last 3 years, government
spending has reached the figure of 17.2 percent
of the total Gross domestic product (GDP),
and budget deficits have been more or less 1.9
percent of total GDP. Public debt is about 35
percent of the economy’s GDP. The combined value of exports and
imports is 39 percent of GDP. Governing Efficiency The Iranian government holds direct
ownership hundreds of public enterprises and have indirect
control over several companies, which ultimately restricts the
capacity of private-sector companies to participate
in the competition. In addition, Labor regulations
are constricting, and the labor market
remains stationary. The government has retained
economically damaging price controls and subsidies ever since the
Islamic Revolution instigated. Severe government controls limit
the access to financing for businesses and government also
controls credit allocation.

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