Mexico's Economic System

Mexico's GDP

"Mexico is quickly becoming an emerging market heavy-weight. Its economic output, as measured by Gross Domestic Product (GDP) was $2.143 trillion in 2014. This was much less than its primary trading partner, the United States ($17.46 trillion) but larger than its other NAFTA partner, Canada ($1.579 trillion). Mexico's geographic size is equivalent to Saudi Arabia, but supports five times as many people while exporting 1/4 of the oil.
Mexico's 2014 GDP growth rate was 2.4%, better than the 1.1% rate in 2013, but slower than the money percentage rate in 2012. Its standard of living, as measured by GDP per capita, was $17,900, less than half that of its other NAFTA partners. (Source: CIA Factbook)" more here

Mexico's Mixed Economy

Mexico is considered to have a mixed economy, infused with a market, traditional and command economy. Mexico's exports and and manufacturers are what determines Mexico's  economic success. It's economy has become increasingly oriented toward manufacturing since entering the North American Free Trade Agreement (NAFTA).Mexico's economy is reliant on its domination on the manufacturing, oil and electronic, industry in Latin America. 

Mexico's foreign trade is a larger percentage of its economy than any other large country. Mexico's largest export is manufactured products. It produces and exports great amounts of oil, about nearly 3 million barrels per day. Pemex, directed by Juan José Suárez Coppel, has a monopoly on the oil and gas industry. It also is one of the largest manufacturing industry, especially to the United States, although it is being greatly effected by China's exports to the U.S. Currently, there has been a higher demand in the auto manufacturing sector, causing improvements in foreign investments. More here

Mexico also has a commanding economy. Although the market has a greater influence on the economy, the government promoted the nationalization of the oil industry and caused a great increase in the GDP.

"Mexico's current government, led by President Enrique PENA NIETO, emphasized economic reforms during its first two years in office, passing and implementing sweeping education, energy, financial, fiscal and telecommunications reform legislation, among others, with the long-term aim to improve competitiveness and economic growth across the Mexican economy. " more here

The traditional aspect of the economy is concentrated on productions in agriculture and in the workforce.Although it only makes up just 3.3 percent of the Mexican GDP, it employs as much as 13% Mexican workforce.  "As many as 52 million people are estimated to live at or below the poverty line in Mexico. This has also led to a cultural phenomenon known as remittances, in which Mexicans are living abroad in nations with higher wages (often the United States) send money back to their families and friends still living in Mexico. This contributed an estimated $22.4 billion to the Mexican economy in 2012. " more here

Mexico group: Viridiana, Jose, Tzu-Huan, Tzu Heng

Mexico’s Economic System

Mexico’s economy is, of course, a mix. A mix of free market, tradition, and command. The government is basically stable and fairly involved in the economy. Despite having a large and complicated industrial base (Mexico is the world’s 4th largest car exporter), the market is still emerging; although there are areas of wealth and modernity, over half of the population is stuck in poverty, with a another quarter in danger of slipping back in. Many poverty-stricken areas remain unconnected because “many of the foundations of the modern Mexican economy were laid a century ago, in the form of roads and railways...That leaves swathes of the country unconnected.”

A majority of Mexico’s society also remain firmly rooted in beliefs of culture and tradition, and resist modernization. Such people think that small business , tied to families, provide stability and are preferable to modernizing. Small firms, usually unregistered, employ most of the labor force and sap the domestic economy because they avoid taxes. The romantic notions of these small business people (who lack skills, contacts, and opportunities) are perpetuated by interest groups who benefit from this arrangement, for example traditional political bosses whose power base resides in peasant communities.

Mexico vastly underutilizes its resources. Not only does it fail to fulfill its economic potential in cities, because of violent, drug related crime, a negative externality of the command components of Mexico's economic system is rampant corruption. Government corruption results in resources not being used to benefit the public good, fulfilling only an individual desire and results in a massive waste of resources.

While, there are exceptions, most Mexican business are struggling to grow in this current economic system. Without public services that make taxes seem worth paying and without a political establishment that serves national interest, the only trustworthy institution people turn to is family. However, despite traditional ideals and government corruption, Mexico's economy is growing and transitioning toward a more free-market style and, as a neighbor to the U.S., has a lot of bearing on our own economy.

Chinese Economic System

The People’s Republic of China is a mixed economy that leans towards being more centrally planned, but has been changing in becoming more of a free market. The government has set legislation in which impedes the free flow of information throughout the country and outside world, most notably censorship on the Internet through what is commonly called the Great Firewall. A lack of information has the potential to influence an economic decision had the appropriate information been present. Another aspect of the Chinese economy that reflects its bias towards being more centrally planned is that a wealth of Chinese companies are owned by the state, rather than privately. These range from the transportation, construction, banking, health, shipping, energy, and agricultural sectors. Compared to other industrial powerhouses, China has only recently allowed for entrepreneurship on more visible scales in the last thirty or so years, officially recognizing the need for the private sector to supplement its state sector in 1987. China’s currency, the renminbi, also called the Chinese Yuan, was largely lifted of regulation on exchange rates in 1994, allowing for it to become valued by the market, albeit with limited control. Three years later, the Chinese government passed the Price Law, allowing for prices to be set by the market, but still with light management. Since the start of the 1980s China set up various special economic zones and development areas. The subsequent regions of China enjoyed greater economic free compared to the rest of the country. These zones include most notably Shenzhen, Shanghai Pudong, Tianjin, and Guangzhou, as well as fifteen others. Over the years, the Chinese government has reformed to allow the opening of markets to investors, lessen trading restrictions, and the increased protection of private property. Recently, China has been strengthening its fiscal policy to further boost its economy. This has been achieved through tax system reforms and government spending on projects such as infrastructure and has been in response to slowing economic growth and related concerns. As the Chinese economy continues to slow, the Communist Party will continue to make efforts to maintain its reputation on the global economic stage. 

"Still, the deceleration has been faster than expected by the Chinese leadership, which at times has fumbled as it tries to restructure the economy to rely more on consumer spending and services. That effort, which economists say is key to nurturing long-term growth, is making headway. But Beijing’s appetite for overhauls appears to be slowing as it moves to shore up the economy near term.

A major challenge is demand, both at home and for exports. Xiang Yili, general manager of Wenzhou Topteam International Trade Co., which exports stationery products, said sales at the closely held company fell 10% in the third quarter year to year and will probably do the same in the fourth quarter. The company, based in China’s Zhejiang province, has bought more automation equipment to cut costs but the outlook remains difficult, she said." - Wall Street Journal

Chinese GPA Growth Rate

Iran's Economic System

      Iran’s modern economy is transitioning into a free market. However, Iran, compared to other countries in its region, is progressing very slowly.

     “Iran’s economic freedom score is 41.8, making its economy the 171st freest in the 2015 Index. Its score has increased by 1.5 points since last year, with improvements in five of the 10 economic freedoms, including labor freedom, the control of government spending, and monetary freedom, outweighing a decline in business freedom. 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.”

more here.

     On a scale from the extreme command economy of North Korea to the extreme free market of Singapore, Iran falls under the command category, though it has been shifting towards a more moderate system in recent years.

     Iran is a mixed economy and is thus largely controlled and regulated by the Central Government and traditional aspects of Middle Eastern society. The command aspect of their system grants the state control over all large-scale industries ranging from the mining of natural resources to banking, and results in common government corruption and mismanagement. The governmental sanctions that were enacted in 2010 have shrunken Iran’s economy to between 15 and 20% smaller than before sanctions were established (time.com: 3/27/15) , and have left Iran able to access only one fifth of the money held in international accounts, thus revealing the central governments power to establish economic stability within the country. Iran’s economy also contains elements of Middle Eastern Tradition, such as Bazaars, which are urban marketplaces where international and national trade takes place. Bazaars are a foundational element to Iranian culture, as they have existed since the 16th century, and are identified with the traditional culture of the country. These mass marketplaces allow the economy to thrive through the customary exchange of goods and services, therefore exhibiting the traditional aspects that affect the economy.

An Iranian bazaar:

     With Iran entering into the new nuclear deal, it will become possible for it to enter the international banking system. As it becomes integrated into the world market, it will begin to shift even more into the moderate economic zone that many world powers occupy.

Post by Misha Zaied, Will Lattimore, Meliah Capistrano, and Devon Smith

Nigeria's Mixed Economy

Having the largest population and economy in Africa, Nigeria is considered to be an emerging global power. With the twenty first largest economy in the world, the "Giant of Africa" is also considered an emerging market by the World Bank.

Attaining a stable government less than two decades ago, and is recognized as having one of the most corrupt governments, Nigeria clearly does not sit next to North Korea on the Continuum of Mixed Economies. With a history of coup d'états by the military, the government is now in control, however it is quite weak. According to online article "Nigeria Economic Structure" from Economy Watch,

Nigeria’s economic structure suffers from a lack of infrastructure and poor regulation related to foreign and private investments.

 Nigeria's government is responsible for the lack of infrastructure, which shows the lack of government control. Nigeria's economy relies heavily on oil and natural gas exports, creating eighty-three percent of government revenue. However, there is a lot of corruption within the oil industry (read more about this here). Agriculture accounts for two thirds of employment and is responsible for nearly twenty-seven percent of the country's GDP.



There are over 300 tribes in Nigeria which contribute to the the traditional style economy (read more here). All of the different traditions and languages make it difficult for tribes to communicate and relate to one another.

Nigeria's mixed economy lies closer to a market economy than a command because of the human capital within agriculture and the oil trade industry. Traditional aspects of Nigeria also contribute to the economy, however they are not as prominent.

AP 6 Blog Post #2: Iran

AP Comparative Government, period 1

Karl, Gianna, Johnny

22, October 2015

Economic System of Iran:

“Weak rule of law and autarkic trade and investment policies have long undermined the foundations of economic freedom in Iran. Political and religious interference in judicial matters is common. All investment must be approved by the government and is limited to certain sectors. Small-business entrepreneurs struggle to register businesses or acquire capital.”

----http://www.heritage.org/

    The economy of Iran is currently in transition and is considered a mixed economy with a large public sector. A majority of the economy is centrally planned, with the Iranian government directly operating hundreds of state-owned enterprises and many companies affiliated with the nation’s security forces. Price controls and subsidies (particularly on food and energy) burden the economy along with widespread corruption and the smuggling of contraband, both of which undermine the potential for the growth of private sector, which  includes small-scale workshops, farming, and manufacturing. Iran’s economy is characterized by a large hydrocarbon sector, small scale agriculture and services sector, and a noticeable state presence in manufacturing and financial services. Iran is the world’s eighteenth largest by purchasing power parity (PPP) and is ranked 29th by nominal gross domestic product (GDP) primarily because of its immense oil and gas reserves that account for a majority of annual revenue. Oil export revenues allow Iran to amass billions of dollars in revenue each year, therefore its economic activities are greatly dependent on petroleum products. A unique feature of Iran’s economy is the presence of religious foundations called Bonyads; which are charitable trusts in Iran that play a major role in the part of the economy that is not dedicated to petroleum. After the 1979 revolution, Bonyads were nationalized with the intention of redistributing income to the poor. Today, they control an estimated twenty percent of Iran’s gross domestic product and channel revenues to groups supporting the Islamic Republic. Exempt from taxes, they have been criticized for siphoning subsides from the government and providing inadequate charity to the poor. There is substantially less business freedom in the economy of Iran, as all investments are limited to certain sectors and must be approved by the government. As a result, it is difficult for entrepreneurs to acquire capital or even register their businesses. Despite these challenges, small consumer-run marketplaces called bazaars are common in nearly all regions of Iran. An example of the workings of a free market economy, bazaars are known as merchandising areas where goods and services are exchanged or sold. This network of merchants, bankers, craftsmen, and artisans operate with no government influence, and the rise of bazaars and stock trading centers in the Muslim world has successfully allowed the creation of new capitals.

    However, economic sanctions imposed by the United States and the European Union in response to Iran’s nuclear weapons program has likely had the most devastating effect on the country’s economy. For example, petroleum exports,which provide about eighty-five percent of government revenues, declined to about 1.5 million barrels per day in 2012 from about 2.5 million barrels per day the year prior. Additionally, sanctions have reduced Iran's access to products needed for the oil and energy sectors, prompted many oil companies to withdraw from Iran, and caused a decline in oil production due to reduced access to technologies needed to improve their efficiency. The end of these economic sanctions on Iran would give Iran access to frozen assets that Obama administration estimates at roughly $56 billion, which the country could use to boost oil revenue, revive domestic industries, and reduce unemployment. Sanctions force the government to take more control, impeding the transition to the free market.

Although Iran’s economy is currently in transition from one that is centrally planned to one with more aspects of the free market, the evolution has been a slow and convoluted process marked by inefficient state policies, poor management of resources, internal conflicts, and sanctions.

An Iranian Bonyad advertisement.

An Iranian bazaar. Note the various colorful signs advertising their wares, a primary aspect of a free market economy.

A government controlled oil plant. All of the major resource production plants in Iran are directly controlled by the government, and the few private enterprises existing in those fields are under contract with the government.

Continuum of mixed economies shows that Iran is more towards a centrally planned economy.

Sources

For more information, visit these sites:

CIA World Factbook

The World Heritage Site

The World Bank

The Washington Post

China's Mixed Economy

Background

The People’s Republic of China (PRC) was formed in 1949, when Mao Zedong took power. Under Mao’s government, China’s economic system leaned more towards a command economy than mixed or a free market, with economic development goals set by special planning committees of the government. Factories and farmers operated under state plans. In 1978, Deng Xiaoping came to power. Deng’s “Ten Year Plan” pushed China’s economy to grow industrially and agriculturally, with investments in new technology. Deng also opened up China to foreign investment, which allowed more capital to enter the country.

In 1992, China’s government decided to create a market economy. According to the online article, “Economic System,"

To meet the requirements of the market economy, the operations of state-owned enterprises should be changed so that they fit in with the modern enterprise system. A unified and open market system should be established in the country so as to link the rural and urban markets, and the domestic and international markets, and to promote the optimization of the allocation of resources. The function of managing the economy by the government should be changed so as to establish a complete macro-control system mainly by indirect means.

In 1990, the Shanghai stock exchange re-opened after forty years. China then joined the World Trade Organization in December, 2001.

Imports and Exports

China exports $2.34 trillion worth of goods and imports $1.96 trillion worth of goods per year. Main exports include machinery, apparel, textiles, iron and steel. Main imports include machinery, oil and mineral fuels, and medical equipment.

“Socialist Market Economy”

China’s official description of their economic system is a socialist market economy. This is defined as an economic system in which industry and commerce are run by private enterprise within limits set by the government to ensure equality of opportunity and social and environmental responsibility. China’s government does set limits for the private sector, but the size of the public sector is still very large. The state runs financial institutions (banking), energy, tobacco, transportation, publishing, basic telecommunications, and oil and gas.

Despite the large number of state run enterprises, in 2012, they only accounted for 34% of total fixed investment in China with 48% attributed to private firms. Similarly, in exports, only 11% of exports were manufactured under government control compared to 39% by domestically owned firms. This suggests that privately owned firms are faring just as well as state-run ones, or possibly even better. According to the book, Markets Over Mao, the profit of the private sector in 2012 was 13.9% as opposed to 4.9% in the public sector.

Figure 1

China’s True Mixed Economy

China’s GDP has skyrocketed in the past twenty-four years as seen in Figure 1. More information on this can be found here. This is due to the economic reforms China has implemented, the opening of the stock market, and the development of the private sector. China claims to be a socialist market economy, which in part is true, but the government still controls many aspects of the economy. The private sector of China continues to grow which suggests China is leaning towards a free market economy and less towards a command economy like in the country's past. However, China is clearly mixed as the public and private sectors both play large roles in China’s economy.

Russia's Transitioning Economic System

Russia's New Economic System

Russia’s economy has changed drastically since the fall of the Soviet Union. This massive country has switched from a strict command-style economy to one that is transitioning toward introducing more free market elements such as international banking and trade, particularly of oil by large private corporations such as LUKoil. In fact, article from the Center for Strategic and International Studies claimed that “Never in its history has Russia been more prosperous or integrated into the global economy than it is now. Seemingly, this is a positive development and the achievement of one of the core goals of U.S. policy toward Russia since the Soviet collapse.” The complete article can be viewed here.

Recently in economics we have discussed how countries’ economic systems, or how they choose to answer the economic questions of production, are never completely centrally planned or free market. They are always somewhere in-between on the continuum. Furthermore, we have discussed how economic systems can change over time in responses to changes in leadership style or economic necessity. Russia is a perfect example of such an economic transition. Since the fall of the Soviet Union in 1991 Russia has abandoned its pure centrally-planned and isolationist economy in favor of a system that promotes international trade and some private entrepreneurship.Russia has goals set by the Ministry of Economic Trade that would put it at the top in Europe and fifth in the world, by 2020. Russia is still quite far from being completely free market as government oil firms still exist, however Russia’s economy is far more free than it used to be as it has transitioned to a mixed system of free markets and some government intervention.

Ethan Duval, Russia, Period 4

UK Economic System

The UK has a mixed economy that leans towards a free market with some government controlled parts.

The UK has fairly free economy; it is one of the freest countries in Europe. It’s economy was built on the foundation of open trading and an advanced financial sector. It is a powerful trading company. The UK also has efficient businesses and a free labor market. Several of the UK’s most prominent industries have been privatized, such as British Rail, British Airways, and British Petroleum.

"Historically a champion of economic freedom in Europe, the United Kingdom has developed its economy based on a strong rule of law, an open trading environment, and one of the world’s most advanced financial sectors. A relatively liberal labor market by European standards complements one of the world’s most efficient business environments."  (read more here)

However, the UK does have large rates of government spending, so the economy is still mixed between the public and private sector. The government provides many resources free for its citizens, such as healthcare, substantial welfare benefits, and education, among other things. This is funded by high tax rates. The highest individual UK tax rate currently is 45%.

There are also elements of a traditional economy still present in the UK, as they still have a Queen. The Queen brings in money from tourism, however there is still a large cost needed to provide for the Royal Family, so this section of the economy is very small.

UK Group: Ruby, Emily, Kayla

Economic System of the United Kingdom

The United Kingdom uses a mixed economy. Their system is based on free trade. The UK's economy lets the market make the majority of the UK's economic decisions. The market does not make economic decisions for military spending and public education. The spending done by the government for social needs (military spending and public education) is 35% of the GDP. While the rest of the economic decisions are made by the market.(more here)
                                     
Services, particularly banking, insurance, and business services, are key drivers of British GDP growth. Manufacturing accounts for about 10% of economic output. Capital controls were removed from the UK in 1979. In the 1980s, ownership of public corporations became private sectors. During times of crisis however, the Bank of England coordinates interest rate movements with the European Central Bank.
The government will intervene in the market when needed. In 2008, BROWN (Labour) government was prompted to implement a number of measures to stimulate the economy and stabilize the financial markets. Gordon Brown was Prime Minister in 2008. In 2010, the CAMERON led coalition government initiated an austerity program to lower the national deficit.(more here)
 The economy has  traditional influences in it as well. There are drinking laws put on youth where it is illegal for youth under 18 to buy spirits in a pub. That puts a strain on businesses who cannot sell their product to a certain demographic. (more here)
Overall, from the 2015 Index of Economic Freedom, from the rankings of most to least free economies, the United Kingdom is at #13. The United Kingdom's economy rests at about 30% centrally planned and about 60% free market.(more here)

Group UK: Garret, Sara, Bayliee

Nigeria's Land and Resources

The majority of Nigeria’s land resources consist of oil products, yet the economy is still diverse. Petroleum is the most prominent export and plays the largest role in the country’s economy, but agriculture and minerals are also abundant. Nigeria is the 12th largest petroleum-producing country in the world. It is drilled off the coast of the Niger Delta, refined, and made further into petroleum products. Amongst the oil refineries are many natural gas deposits.

Cocoa is the leading non-mined product followed closely by rubber, both of which grow in shady and rainforest-like climates. The most popular food products are rice, yams, and cassava (a starchy root from a tropical tree). Over a third of Nigeria is considered to be arable land. About 30% of Nigeria’s population is employed in agriculture. Pre-Nigerian Civil War conditions allowed the country to self-sustain a sufficient amount of food, but they now rely on imports.

Mined products only account for a miniscule fraction of the economy; they include coal, lignite, gold, coke, bitumen, and iron ore. However, the mining of most all of these minerals have dwindled since the mid 20th century and show little sign of returning to their original prosperity. The discovery of Nigerian oil in 1956 pushed mining to the backburner. Many minerals could be produced domestically, but because of this industry’s underdevelopment, they must be imported.

Iran's Natural Resources

    Iran has some of the world's biggest fossil fuel reserves, which it relies on to support its economy.

According to the National Resource Governance Institute,

    "Iran is the second-largest oil producer in OPEC after Saudi Arabia, producing 4.2 million barrels a day in 2011. Oil and gas production accounted for 50 percent of government revenues and 74 percent of exports in 2010."

    The petroleum industry in Iran alone makes up 32% of its GDP, according to the above source. Along with the coal and natural gas industries, it makes up a vast majority of Iran's economy. Because of this, fluctuations in global demand for fossil fuels cause massive change within the country, sometimes with colossal effects. This reliance on oil in particular, along with the large amount accessible for harvest has kept the prices relatively low.

    According to the graph above, Iran's main exports of natural gases and crude oil are both abundant and diverse resources that are easily accessible and extractable. Considering the large mass of these natural resources, Iran relies on these reserves to expand its economy and create a steady source for income.

    Iran is very dependent on natural resources for its economy. Petroleum, natural gas, and coal are some of the natural materials that Iran exports, crude petroleum being the most exported. 72% of Iran’s exports are crude oil. Iran’s economy is strongly based on the exportation of oil. Because Iran does not produce a lot of capital, their natural resources are the main source of income for the country and the expanding of their economy relies on the price of oil increasing.

By Misha Zaied, Meliah Capistrano, Devon Smith, Will Lattimore

Land Resourses of Nigeria

     Nigeria

Nigeria has a rural economy that most Nigerians support becaus it is mostly based off of productivity of land. 31% of this land is cultivated. The soil fertility there varies but mainly poor. Poor because most of the soil there is mainly, always overused or eroded. Trees help prevent the soil from eroding but the Nigerians use the trees for materials they need. The tree are starting to barren, mostly around large cities. Petroleum and natural gases are the main earnings Nigeria gets from their exports. The reason to this is because they are concentrated in large amounts. Now, iron ore is generally low grade. Other low graded land resources they have are lignite (brown coal), limestone, subbituminous coal (ordinary cool but low graded and higher grading than lignite), tin, and columbite. Petroleum and natural gas industries have damaged the land majorly by having oil spills, burnoff of natural gas, and clearance of vegetation. This damaged the vegetation and waterways in the Niger Delta.

Land Resources of the United Kingdom

By: Sara Jimenez, Garret Hatch, Bayliee Kaser

              The United Kingdom has many mineral resources such as; coal, iron ore, lead, zinc, gold, tin, limestone, salt, clay, chalk, gypsum, potash, silica sand, and slate. These minerals are used for construction and capital production. The United Kingdom also has petroleum and natural gas which the country uses for energy and production.(more here)

              The United Kingdom is also a big agriculture producer. Some of the country's agricultural land resources are; wheat, barley, sheep, potatoes, hay, grain, peas, and more. (more here)

              The United Kingdom's natural resources are abundant and worked to max efficiency with advanced harvesting methods for minerals and agriculture. Being one of the very first countries to industrialize, the United Kingdom has much modern day machinery to aid production in mining and farming. With the advanced tools that the United Kingdom has for gathering natural resources, this allows the country to utilize its labor force for other purposes since it takes less people to work the land with the advances machinery at the United Kingdom's disposal.

Group UK: Garret, Sara, Bayliee

Land Resources of Russia

Nykyle Hewett
Nick Iverson
Ethan Duval
10/2/15
AP comparative Government
Silva Brown





                   Russia's economy is heavily dependent on energy industries, particularly oil, which is mined domestically. However, their industries still matters.

Russians economy available on Forbes.

                  "The Russian state’s finances really are based on the heavy taxation of energy producers, and the Kremlin would be in a world of trouble if the oil/gas spigot ever truly ran dry."

                   "But Russia, despite what you often hear, is more than just a gas station. It’s manufacturing and service sectors aren’t particularly competitive by world standards (very few people in North America are buying Russian cars) but they do exist."

                   As we learn about Economics and how it works,we learn that many of the major world economies have a percentage that is based on oil sales. So as Russian trades oil to other countries and consumes it, they participate in the world's economy on oil alone. Russia's economy is largely dependent on it's income from land resources. 

Nykyle Hewett
Nick Iverson
Ethan Duval
10/2/15
AP comparative Government
Silva Brown

AP 6 Blog Post #1: Iran

AP Comparative Government, period 1

Karl, Gianna, Johnny

2 October 2015

Iran’s Land Resources:

Iran is a country with numerously abundant natural resources. Despite common misconceptions, Iran’s wide range of temperature fluctuations and multiplicity of climate zones make it very possible to cultivate a diverse variety of crops so that the economy is not solely dependent on the petroleum industry. Nonetheless, Iran is the second largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. The country’s extensive oil deposits are located primarily in the southwestern provinces and the Persian Gulf. According to the U.S. Energy Information Administration, as of 2014 statistics, Iran exports approximately 3,375,000 barrels of refined oil per day. However, according to the Observatory of Economic Complexity, this accounts for only 3.39 percent of exports from Iran. Crude, or unrefined, oil (a natural resource) remains the largest Iranian export, at 72.1 percent of the total exports of Iran. Because the Iranian economy relies so heavily on this single resource for a large percentage of its income, there are more incentives to develop an increasingly diversified and globally integrated economy.

Iran also has significant natural deposits of coal, copper, iron ore, zinc, and lead. Water is scarce as a result of minimal rainfall, and because of this, less than 12% of the land is arable. However, a large amount of irrigation water does come from the Caspian sea and Lake Urmia. Iran produces an assortment of grain crops, such as wheat, barley, rice, and corn. Farmers for these crops receive subsidized access to input costs such as fertilizer and pesticides, as well as a guaranteed support price for their products. Additionally, Iran’s natural agricultural commodities include fruits such as dates, figs, pomegranates, melons, and grapes. In the more arid part of the country, pistachio and other drought-tolerant trees grow without the help of human activity. As traditional, small-scale farming was the main structure for agricultural communities for many generations, natural farming continues to be a widespread practice despite modern agricultural techniques. Livestock products include lamb, beef, and goat meat. Taking into account the growing demands of its citizens, Iran aims to increase the volume of meat production by approximately 200,000 tons in the next few years in the hope that it will potentially become an active meat exporter in the future. As one of the largest countries in the Middle East, Iran has considerable natural land resources which assist the power, agriculture, and livestock industries of the country.

For more information, visit the following sites:

Observatory of Economic Complexity

Index Mundi (Original source is the CIA factbook, with a link on this website)