Home > Uncategorized > Iran’s Economic Freedom Under Mullahs’ Regime Ranks 173 Among 178 Countries

Iran’s Economic Freedom Under Mullahs’ Regime Ranks 173 Among 178 Countries

January 14, 2014 Leave a comment Go to comments

1-14-2014 12-05-43 PM

Iran’s economic freedom score is 40.3, making its economy the 173rd freest in the 2014 Index. Its score has decreased by 2.9 points from last year, reflecting deteriorations in six of the 10 economic freedoms including labor freedom, monetary freedom, trade freedom, and freedom from corruption. Iran is ranked last out of 15 countries in the Middle East/North Africa region, and its overall score is well below the world and regional averages.

Over the 19 years during which Iran has been graded in the Index, its economic freedom has advanced by about 4 points. Score improvements have occurred in just three of the 10 economic freedoms, most notably in fiscal freedom and freedom from corruption. A large drop in labor freedom, compounded by deterioration in most measures of market openness, has undermined overall progress and kept the country generally in the ranks of the “repressed” economies rated in the Index.

Heavy state interference in many aspects of private economic activity has resulted in economic stagnation in Iran’s non-oil sector and a serious lack of overall economic dynamism. A restrictive business and investment environment continues to hamper development of a viable private sector. Private firms, largely marginalized by the burdensome regulatory environment, are further undermined by government inefficiency and mismanagement.

BACKGROUND

Iran had one of the Middle East’s most advanced economies before the 1979 Islamic revolution. Today, the economy is in shambles thanks to a policy agenda characterized by large subsidies to favored sectors, a bloated public sector, and high inflation. Corruption is also a serious problem. The effects of sanctions imposed by the U.S. and European Union in 2012 in response to Iran’s illicit nuclear weapons program have been devastating. Petroleum exports, which provide about 85 percent of government revenues, declined to about 1.5 million barrels per day in 2012 from about 2.5 million barrels per day in 2011. President Hassan Rowhani, elected in June 2013, faces a difficult task in reviving Iran’s faltering economy.

RULE OF LAW VIEW METHODOLOGY

Property Rights  10.0  Create a Graph using this measurement

Freedom From Corruption  23.4  Create a Graph using this measurement

Corruption is pervasive. The hard-line clerical establishment has gained great wealth through control of tax-exempt foundations that dominate many economic sectors. The government long ago abolished independent financial watchdogs. The judicial system is not independent; the supreme leader directly appoints the head of the judiciary, who appoints the senior judges. The government has confiscated property belonging to religious minorities.

LIMITED GOVERNMENT VIEW METHODOLOGY

Government Spending  85.9  Create a Graph using this measurement

Fiscal Freedom  80.6  Create a Graph using this measurement

The top individual income tax rate is 35 percent, and the top corporate tax rate is 25 percent. A standard tax applies to all property transfers. Other taxes include a value-added tax (VAT). The overall tax burden equals 9.3 percent of GDP. Government expenditures remain around 22 percent of gross domestic output, and public debt has fallen to about 11 percent of GDP. Sanctions on the oil industry continue to put pressure on public finances.

REGULATORY EFFICIENCY VIEW METHODOLOGY

Business Freedom  62.3  Create a Graph using this measurement

Labor Freedom  41.7  Create a Graph using this measurement

Monetary Freedom  47.3  Create a Graph using this measurement

Obtaining operating permits takes more than 300 days and costs over twice the level of annual average income. Labor market rigidity, exacerbated by state interference, continues to discourage dynamic job growth. Tight government controls distort price levels. In 2011, Iran led the world in power and fuel subsidies, spending over $80 billion to lower consumer prices.

OPEN MARKETSVIEW METHODOLOGY

Trade Freedom  41.4  Create a Graph using this measurement

Investment Freedom  0.0  Create a Graph using this measurement

Financial Freedom  10.0  Create a Graph using this measurement

Iran’s average tariff rate is a relatively high 21.8 percent. Foreign investment is screened by the government, and there are restrictions on investment in several sectors of the economy. State-owned commercial banks account for a majority of total banking-sector assets, and credit allocation is directed by the government. Capital markets are not fully developed.

Why Does Economic Freedom Matter?

Economic freedom is a crucial component of liberty. It empowers people to work, produce, consume, own, trade, and invest according to their personal choices.

Why Does Economic Freedom Matter? – from The Heritage Foundation’s Understanding America series – explores the framework America’s Founders established for an economically free nation, and what economic freedom means for the United States and the rest of the world.

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All Rankings

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 Free

rank

country

overall

change

rank

country

overall

change

1

Hong Kong

90.1

+0.8

4

Switzerland

81.6

+0.6

2

Singapore

89.4

+1.4

5

New Zealand

81.2

-0.2

3

Australia

82.0

-0.6

6

Canada

80.2

+0.8

Mostly Free

rank

country

overall

change

rank

country

overall

change

7

Chile

78.7

-0.3

21

Lithuania

73.0

+0.9

8

Mauritius

76.5

-0.4

22

Georgia

72.6

+0.4

9

Ireland

76.2

+0.5

23

Iceland

72.4

+0.3

10

Denmark

76.1

0.0

24

Austria

72.4

+0.6

11

Estonia

75.9

+0.6

25

Japan

72.4

+0.6

12

United States

75.5

-0.5

26

Czech Republic

72.2

+1.3

13

Bahrain

75.1

-0.4

27

Botswana

72.0

+1.4

14

United Kingdom

74.9

+0.1

28

United Arab Emirates

71.4

+0.3

15

The Netherlands

74.2

+0.7

29

Macau

71.3

-0.4

16

Luxembourg

74.2

0.0

30

Qatar

71.2

-0.1

17

Taiwan

73.9

+1.2

31

South Korea

71.2

+0.9

18

Germany

73.4

+0.6

32

Norway

70.9

+0.4

19

Finland

73.4

-0.6

33

Saint Lucia

70.7

+0.3

20

Sweden

73.1

+0.2

34

Colombia

70.7

+1.1

Moderately Free

rank

country

overall

change

rank

country

overall

change

35

Belgium

69.9

+0.7

63

Dominica

65.2

+1.3

36

The Bahamas

69.8

-0.3

64

Turkey

64.9

+2.0

37

Malaysia

69.6

+3.5

65

Rwanda

64.7

+0.6

38

Uruguay

69.3

-0.4

66

Ghana

64.2

+2.9

39

Jordan

69.2

-1.2

67

Kazakhstan

63.7

+0.7

40

Brunei Darussalam

69.0

N/A

68

Montenegro

63.6

+1.0

41

Armenia

68.9

-0.5

69

Portugal

63.5

+0.4

42

Latvia

68.7

+2.2

70

France

63.5

-0.6

43

Macedonia

68.6

+0.4

71

Panama

63.4

+0.9

44

Israel

68.4

+1.5

72

Thailand

63.3

-0.8

45

Barbados

68.3

-1.0

73

Trinidad and Tobago

62.7

+0.4

46

Cyprus

67.6

-1.4

74

Slovenia

62.7

+1.0

47

Peru

67.4

-0.8

75

South Africa

62.5

+0.7

48

Oman

67.4

-0.7

76

Kuwait

62.3

-0.8

49

Spain

67.2

-0.8

77

Saudi Arabia

62.2

+1.6

50

Poland

67.0

+1.0

78

Paraguay

62.0

+0.9

51

Hungary

67.0

-0.3

79

Madagascar

61.7

-0.3

52

Saint Vincent and the Grenadines

67.0

+0.3

80

Dominican Republic

61.3

+1.6

53

Costa Rica

66.9

-0.1

81

Azerbaijan

61.3

+1.6

54

Albania

66.9

+1.7

82

Swaziland

61.2

+4.0

55

Mexico

66.8

-0.2

83

Guatemala

61.2

+1.2

56

Jamaica

66.7

-0.1

84

Samoa

61.1

+4.0

57

Slovakia

66.4

-2.3

85

Kyrgyz Republic

61.1

+1.5

58

Malta

66.4

-1.1

86

Italy

60.9

+0.3

59

El Salvador

66.2

-0.5

87

Croatia

60.4

-0.9

60

Cape Verde

66.1

+2.4

88

Zambia

60.4

+1.7

61

Bulgaria

65.7

+0.7

89

The Philippines

60.1

+1.9

62

Romania

65.5

+0.4

90

Sri Lanka

60.0

-0.7

Mostly Unfree

rank

country

overall

change

rank

country

overall

change

91

Uganda

59.9

-1.2

122

Mali

55.5

-0.9

92

The Gambia

59.5

+0.7

123

Yemen

55.5

-0.4

93

Vanuatu

59.5

+2.9

124

Malawi

55.4

+0.1

94

Namibia

59.4

-0.9

125

Senegal

55.4

-0.1

95

Serbia

59.4

+0.8

126

Pakistan

55.2

+0.1

96

Lebanon

59.4

-0.1

127

Niger

55.1

+1.2

97

Mongolia

58.9

-2.8

128

Mozambique

55.0

0.0

98

Burkina Faso

58.9

-1.0

129

Nigeria

54.3

-0.8

99

Fiji

58.7

+1.5

130

Suriname

54.2

+2.2

100

Indonesia

58.5

+1.6

131

Bangladesh

54.1

+1.5

101

Bosnia and Herzegovina

58.4

+1.1

132

Papua New Guinea

53.9

+0.3

102

Nicaragua

58.4

+1.8

133

Guinea

53.5

+2.3

103

Morocco

58.3

-1.3

134

Mauritania

53.2

+0.9

104

Tonga

58.2

+2.2

135

Egypt

52.9

-1.9

105

Gabon

57.8

0.0

136

Cameroon

52.6

+0.3

106

Tanzania

57.8

-0.1

137

China

52.5

+0.6

107

Côte d’Ivoire

57.7

+3.6

138

Liberia

52.4

+3.1

108

Cambodia

57.4

-1.1

139

Tajikistan

52.0

-1.4

109

Tunisia

57.3

+0.3

140

Russia

51.9

+0.8

110

Moldova

57.3

+1.8

141

Burundi

51.4

+2.4

111

Kenya

57.1

+1.2

142

Comoros

51.4

+3.9

112

Honduras

57.1

-1.3

143

Guinea-Bissau

51.3

+0.2

113

Benin

57.1

-0.5

144

Laos

51.2

+1.1

114

Brazil

56.9

-0.8

145

Maldives

51.0

+2.0

115

Belize

56.7

-0.6

146

Algeria

50.8

+1.2

116

Bhutan

56.7

+1.7

147

Vietnam

50.8

-0.2

117

Seychelles

56.2

+1.3

148

Sierra Leone

50.5

+2.2

118

Djibouti

55.9

+2.0

149

Nepal

50.1

-0.3

119

Greece

55.7

+0.3

150

Belarus

50.1

+2.1

120

India

55.7

+0.5

151

Ethiopia

50.0

+0.6

121

Guyana

55.7

+1.9

Repressed

rank

country

overall

change

rank

country

overall

change

152

Togo

49.9

+1.1

166

Argentina

44.6

-2.1

153

Micronesia

49.8

-0.3

167

Chad

44.5

-0.7

154

Lesotho

49.5

+1.6

168

Equatorial Guinea

44.4

+2.1

155

Ukraine

49.3

+3.0

169

Republic of Congo

43.7

+0.2

156

Haiti

48.9

+0.8

170

Timor-Leste

43.2

-0.5

157

São Tomé and Príncipe

48.8

+0.8

171

Turkmenistan

42.2

-0.4

158

Bolivia

48.4

+0.5

172

Democratic Republic of Congo

40.6

+1.0

159

Ecuador

48.0

+1.1

173

Iran

40.3

-2.9

160

Angola

47.7

+0.4

174

Eritrea

38.5

+2.2

161

Central African Republic

46.7

-3.7

175

Venezuela

36.3

+0.2

162

Burma

46.5

+7.3

176

Zimbabwe

35.5

+6.9

163

Uzbekistan

46.5

+0.5

177

Cuba

28.7

+0.2

164

Kiribati

46.3

+0.4

178

North Korea

1.0

-0.5

165

Solomon Islands

46.2

+1.2

Not Ranked

rank

country

overall

change

rank

country

overall

change

N/A

Afghanistan

N/A

N/A

N/A

Liechtenstein

N/A

N/A

N/A

Iraq

N/A

N/A

N/A

Somalia

N/A

N/A

N/A

Kosovo

N/A

N/A

N/A

Sudan

N/A

N/A

N/A

Libya

N/A

N/A

N/A

Syria

N/A

N/A

.

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2014 Index of Economic Freedom

Related link – http://www.heritage.org/index/

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