Economic revival in Iran after Islamic Revolution

Iran is celebrating the 46th anniversary of the Islamic Revolution amid an “all-out economic war” in the words of President Masoud Pezeshkian, which is primarily weighing on the livelihood of ordinary Iranians.

Inflationary pressures on households due to frequent rise of commodity prices have left policymakers faced with a quandary on how to shore up the economy and achieve self-sufficiency as part of the country’s revolutionary mantra.

The Islamic Revolution in 1979 burst upon the stage of history with a “big bang”, ushering in a global movement which aspired to bring about a convergence of Muslim political thought and cleanse it from the infiltration of Western political ideas in order to pave the way for a generation of pious Ummah.

The era of the new republic also gave precedence to economic prospects and aspirations, shifting the focus from the elites and urban areas to the destitute and rural classes and expanding access to basic services such as electricity, water and education in the countryside.   

The results were brisk, leading to positive developments in the livelihoods of Iranians helped by an influx of revenues from the boom in oil prices.  

An ensuing baby boom doubled Iran’s population in four decades from 37 million in 1979 to nearly 84 million in 2020, as Iranians born after the revolution found better opportunities for education.

Some economists say this sudden huge population growth put brakes on the country’s economic revival, but others believe Western hostility towards the Islamic Revolution and concerns over its rapid rise made Iran a constant target of terrorism and aggression.

The discovery of large, commercially most viable reservoirs of oil at the turn of the 19th century had made Iran an object of imperialist interests, with the British being the first to push into the country only to be nudged out by the Americans.  

Since the revolution broke out, Iran has been under US and European sanctions which have hampered its economic growth, not to mention an eight-year destructive war which the former Iraqi dictator Saddam Hussein waged against the country with both Western and Soviet Eastern support.

As it stands, Iran has been struggling under the sanctions but the coercive measures have also been a strong stimulus for indigenous progress.

Detractors would like to debunk this out of hand, arguing that economic revival under sanctions is somehow impossible, but there are precedents to the contrary, with China, Japan, South Korea, and Germany after World War II being the examples which turned challenges into opportunities.    

According to the World Bank, Iran’s gross domestic product has increased to more than $401 billion as of 2023 from $90 billion in 1979 when the revolution broke out.  

This shows the country has developed a system of resistance to external pressures – a long-sought goal demanded by the leadership. However, to ensure sustainable growth, economic policies should focus on reducing dependence on oil, developing knowledge-based industries, expanding regional trade, and strengthening the private sector.

Iran has potential capacities in the sectors of industry, agriculture and technology that can help increase economic growth and improve the country's position in the global economy.

Economic resistance, by definition, is an effort to enhance the country's economic strength against internal and external shocks. It is meant to detect pressure nodes and subsequently control and attenuate them, and under ideal conditions to convert this pressure into opportunity.

In other words, resistive economy aims to reduce dependence and emphasizes the advantages of domestic production and self-reliance.

There are no dearth of natural and human resources, and what it needs is a clear strategy to regulate and build the economy according to a clear economic model.

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