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Iran, Economy

Iranian economy, year war, Iran's economy, oil fields, economic sectors

Although agriculture historically was the most important sector of Iran’s economy, its share of the gross domestic product (GDP) has been declining since the 1930s due to the rise of manufacturing. Meanwhile, the mining sector, which is dominated by the production of oil, has grown rapidly since Iran nationalized its oil fields in the 1950s. Factory manufacturing has experienced periods of both rapid growth and stagnation. Trade and commerce activities have expanded with the country's increasing urbanization. During the late 1970s the Iranian economy appeared ready to grow to a level on par with the world’s developed countries, but the 1979 revolution and the subsequent eight-year war with Iraq strained all economic sectors. However, the need to produce for the war effort actually spurred industrialization, as did government spending on infrastructure development.

In the mid-1990s the service sector contributed the largest percentage of the GDP, followed by industry (mining and manufacturing) and agriculture. About 60 percent of the government's budget came from oil and natural gas revenues, and 40 percent came from taxes and fees. Government spending contributed to average annual inflation rates exceeding 20 percent. In 2000 the GDP was estimated at $105 billion, or $1,650 per capita. Because of these figures and the country’s diversified but small industrial base, the United Nations classifies Iran's economy as semi-developed.

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