Tehrān serves as the primary market for domestic agricultural and manufactured goods in Iran. These products are transported to nearby towns and then further distributed to Tehrān and provincial capitals using various modes of transportation, including air, truck, rail, camel, mule, and donkey. Each city has developed its own market for locally produced goods in the capital and other major cities. The country’s major manufacturing industries, which have had a significant impact on Iran since 1954, are spread throughout the nation and their products are distributed nationwide.
The industrial development that began in the mid-1950s has brought about significant changes in various parts of the country. Iran now produces a diverse range of manufactured goods, including automobiles, electric appliances, telecommunications equipment, industrial machinery, paper, rubber products, steel, food products, wood and leather products, textiles, and pharmaceuticals. Textile mills are concentrated in Eṣfahān and along the Caspian coast. Iran is globally renowned for its handwoven carpets, which contribute significantly to rural incomes and serve as one of the country’s most important export industries.
Prior to the early 1950s, the construction industry in Iran was primarily dominated by small domestic companies. However, increased income from oil and gas, along with easy access to credit, led to a construction boom that attracted major international construction firms to the country. This growth continued until the mid-1970s, when a sharp increase in inflation resulted in tightened credit and the collapse of the construction boom. The industry experienced some revival by the mid-1980s, but housing shortages remain a significant issue, particularly in large urban centers.
The government provides loans and credits to industrial and agricultural projects primarily through banks. In 1979, all private banks and insurance companies were nationalized, and the Islamic Bank of Iran was established in Tehrān, with branches nationwide. Iran has 10 banks categorized as commercial, industrial, and agricultural, all operating under the same regulations. Instead of charging interest on loans, which is considered usury and prohibited by Islamic law, banks impose a service charge, commission, or both. The Central Bank of the Islamic Republic of Iran in Tehrān is responsible for issuing the national currency, the rial.
In spite of the government’s efforts to promote economic self-sufficiency in Iran, the import value of the country remains significantly high. Among these imports, foodstuffs constitute a substantial portion, followed by basic manufactures, machinery, and transport equipment. The export of petroleum products has consistently generated substantial income, resulting in a favorable annual trade balance. Additionally, Iran exports carpets, fruits and nuts, chemicals, and metals. Notable trading partners of Iran include China, the United Arab Emirates, Iraq, Germany, and Turkey.
In spite of the economic liberalization efforts made in the 1990s, government spending in Iran has remained high, including expenditures by quasi-governmental foundations that dominate the economy. It is estimated that service sector spending in Iran regularly accounts for more than two-fifths of the GDP, with a significant portion being government-related spending such as military expenses, government salaries, and social service disbursements.
Tourism in Iran received little attention until the early 1960s, mainly due to the lack of facilities that made traveling in the country quite challenging. However, the Pahlavi government took initiatives to improve the situation by constructing hotels and paving highways, leading to a steady increase in the number of tourists from 1964 to 1978. Unfortunately, the political turmoil in 1978, which resulted in the overthrow of the monarchy, severely damaged the tourist industry. Subsequently, the Islamic regime discouraged tourism from non-Muslim countries as a means to limit Western influences, causing the collapse of services dependent on tourism. Despite government efforts to promote Iran as a tourist destination, the tourism sector remains relatively small in the overall economy.
The existence of labour unions in Iran is merely theoretical, as there is no functioning union system in the country. The Workers’ House, a state-sponsored institution, is supposed to represent workers but often challenges state policies. Local guild unions mainly focus on issuing credentials and licenses. The state generally does not respect workers’ right to strike, and police action has been taken against strikes since 1979.
Around one-fourth of Iran’s workforce is employed in manufacturing and construction, while one-fifth is engaged in agriculture. The remaining workforce is evenly divided among services, transportation and communication, and finance. Although women are permitted to work outside the home, they face restrictions in many occupations, resulting in a relatively low number of women in the workforce compared to their level of education. Most refugees in the country, except for a highly skilled minority, are limited to low-wage, manual labor jobs in construction and agriculture.
The minimum age for workers in Iran is 15 years, but certain sectors of the economy, such as small businesses, agriculture, and family-owned enterprises, are exempted. The workweek consists of six days, with Friday being the day of rest, following the practice in many Muslim countries.
The government heavily relies on income from petroleum and natural gas exports, although this revenue fluctuates with changes in global petroleum markets. Taxes in Iran include corporate taxes and import duties. Additionally, there are voluntary Islamic taxes, such as an individual’s income tax (khums), an alms-tax (zakāt) with variable rates for charitable causes, and a land tax (kharāj) based on the principle of one-tenth (ʿūshr) of crop value, unless the land is tax-exempt.
Iran has a widely dispersed population, with large centers scattered throughout the country. However, the mountainous and desert terrain makes transportation challenging. The efficiency of highways has been hindered by low funding and poor maintenance. Despite these obstacles, motor vehicles, particularly buses and trucks, are the primary means of transportation for both passengers and goods. In recent years, the Iranian government has invested significant resources in road construction and repair, resulting in approximately half of the roads being paved.
The main railway line in Iran runs from the Caspian Sea to the Persian Gulf, with additional lines connecting to various provincial capitals. In 1971, the railway was linked to the European system through Turkey, which greatly boosted trade and tourism. This connection also led to a reduction in airfares and significantly decreased transportation time by sea. By 1971, the Iranian portion of a railway line extending eastward to Singapore was completed up to Mashhad. Iran also has rail connections with Transcaucasia via Jolfā in the northwest. Additionally, a railway line between Bafq and Bandar ʿAbbās was completed in 1991, linking Iran’s rail system to Central Asia. As a result, Iran has positioned itself as a cost-effective transportation hub for the countries in that region.
The Kārūn River is the only navigable river in Iran and is used for transporting passengers and cargo. Lake Urmia offers regular ferry services for both passengers and cargo between the port of Sharafkhāneh in the northeast and Golmānkhāneh in the southwest. Iran has five major ports on the Persian Gulf, with Bandar ʿAbbās being the largest. The oil terminals at Ābādān and Khārk Island, which were destroyed or damaged during the war with Iraq, have been rebuilt, along with port facilities at Khorramshahr and Bandar-e Khomeynī. Iran has also expanded its facilities at the port of Būshehr and constructed a new port at Chāh Bahār (Bandar Beheshtī) on the Gulf of Oman. Caspian seaports, such as Bandar-e Anzalī (formerly Bandar-e Pahlavī) and Bandar-e Torkaman (formerly Bandar-e Shāh), primarily serve trade with northern nations.
Iran Air, the state-owned airline, operates flights to major cities and provincial capitals. Additionally, several major European, Asian, and African airlines serve Iran. International airports are located in Tehrān, Ābādān, Eṣfahān, Shīrāz, and Bandar ʿAbbās.
Telecommunications media in Iran are predominantly state-owned. In the 1990s, the government invested significant resources in developing and expanding the country’s communications infrastructure. This led to a nearly doubled number of telephones and increased telephone service coverage in rural areas. By 2000, almost every Iranian had access to telephone service. The advent of cellular telephones and the Internet has provided Iranians, particularly the youth, with a gateway to the outside world and has sparked a growing interest in global culture.
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