TEHRAN, IRAN— During a recent speech in Khoramabad, Iranian President Mahmoud Ahmadinejad received a surprise dose of reality: There are hungry people in Iran. A group of factory workers showed up to the President’s speech carrying a sign that said “We the workers of Parsilon [factory] are hungry”.
Ahmadinejad stated on other occasions that since the 1979 revolution, “"Iran is among the few countries in the world where no one goes to bed hungry." In 2009, the Iranian President told a group of reporters that before the 1979 revolution, 95% of the Iranian population lived in total poverty under the Shah.
The President’s statements are contradicted by Iran’s own official statistics. According to the country’s center for statistics, about 30 million Iranians live at or below the poverty line.
Iran is the world’s fourth largest oil exporter. But the Iranian economy suffers from many ailments. Chief among the country’s economic woes is escalating prices due to endemic inflation and contradictory fiscal policies.
The government and the state controlled companies dominate more that 75% of Iran’s economy. Corruption, high cost of doing business, and governmental policies have hampered the growth of the Iranian private sector.
Iran’s economy disproportionally relies on oil revenues.
According to the government, Iran’s official unemployment rate is about 11 percent. But among the unemployed, the younger Iranians carry the biggest burden as the government has been unable to create enough jobs to accommodate the country’s relatively young workforce.
In real terms, Iran has had little or no per capita income growth since the Islamic revolution. Although the country’s cleric led government insists otherwise, Iran’s per capita income growth was zero between 1980 and 2005. Any rise in the country’s per capita income since 2005 was due to higher oil prices. But the growth has been negligible nonetheless.
The lack of human capital, institutional infrastructure, and continuous brain drain make development of a free market economy difficult in Iran.
Although the Islamic revolution brought with it a new form of government and a new political ideology, the revolution did nothing to brighten the economic future of the Iranian people.