Iran: from Third to First World

Since most economic observers agree that Iran offers the greatest development potential in the Middle East, it seems appropriate to treat that country first in this present work. Its development experience during the last thirty years illustrates how a medium-sized state with a population of 34 million can be transformed economically, provided ample financial resources are available. Iran is, of course, fortunate in having substantial oil revenues, as it is the second largest producer in the Middle East after Saudi Arabia, with annual revenues averaging almost $20 (US) billion over the 1975–7 period.1 Unlike Saudi Arabia, however, Iran has the necessary complementary resources, both in terms of manpower and land, to ensure that the financial boom resulting from oil exports is translated into real domestic economic growth. Consequently the country is rapidly being modernised along Western lines as economic diversification gathers momentum, and by the 1990s Iranian living standards may not be far short of those prevailing in Western Europe. The Iranian government has in fact become obsessed in recent years with the question of development, since they feel they must modernise quickly, before their oil resources become depleted in a couple of decades’ time.