International trade has positively impacted the economic growth of Iran over the last two decades. The primary source of foreign exchange revenue in Iran is the export of oil and gas. The other export commodities in Iran are petrochemicals, carpets, textiles and edible goods such as fresh and dried fruits. Iran exports goods to countries such as Iraq, United Arab Emirates (UAE), China, Japan, and India. Iran’s imports include gasoline, refined petroleum products, manufacturing materials, food products, motor vehicles and other consumer goods. There is not much in the sector of foreign investment in Iran; this is due to the international sanctions that aim at controlling the development of Iran’s oil and gas industry to reduce resources that can be used for weaponizing the country (Maloney 136).
Iran’s Imports and Exports
The primary sector in Iran’s economy is the oil and gas industry; the nation also manufactures petrochemicals, steel, textiles, and vehicles (Maloney 139). The oil and gas industry is a significant contributor to Iran’s GDP as the country is among the few states with substantial oil reserves such as Saudi Arabia and Russia. Majority of the export earnings in Iran are from oil revenue. The oil sector in Iran is also the recipient of the majority of the country’s domestic and foreign investment. Iran also has vast reserves of natural gas although the state has not become a significant exporter of natural gas yet. Iran’s agricultural sector is still growing although the country exports caviar and pistachio nuts. The climatic conditions and terrain of Iran also support the growing of crops such as tobacco, tea, wheat and even barley ("Iran's Economy" 15).
Iran is among the countries in the Middle East that produce steel although the state also imports steel from other countries due to high domestic demand. The automotive industry in Iran is established as the country is a major manufacturer of motor vehicles. The two major automotive companies in Iran are the Khodro and Sapia firms. Iran has a high domestic demand for automotive and even though the country has a developed automotive industry; there is the need for other motor vehicles to be imported from other countries. Iran imports various types of cars such as luxury vehicles, and those cars used for construction or mining ("Iran's Economy" 21).
Iran’s Trade Partners
The countries that engage in trade with Iran are the United Arab Emirates, Iraq, China, Japan, and India; these countries are the recipients of most of Iran’s exports. Countries such as Germany, China, South Korea and UAE supply merchandise to Iran. The reason why foreign investment is limited in Iran is limited is because international companies do not have direct access to finances as the U.S. Treasury Department managed to convince international banks not to engage in trade with Iran. Global companies that have unlimited financial resources do not invest in Iran as they are not willing to break their relationship with the United States. Companies such as British Petroleum, Total Company, Repsol YPF and Statoil Hydro have been operating in Iran in the last decade. Foreign subsidiaries of United States companies have been able to do business with Iran. International firms such as Coca-Cola, Pepsi, and Nestle have signed contracts with the country to improve food production in Iran ("Iran's Economy" 26).
The Ease of Doing Business in Iran
The United States and United Nations sanctions in Iran were aimed at ensuring the country does not pursue the nuclear weapon agenda and also to cut off terrorist financing. The sanctions have had a negative impact in Iran as they do not make the country a favorable investment country. The sanctions have ensured that Iran does not have access to foreign advanced technologies that could be used in the development of the oil and gas industry (O'Sullivan 9).
Works Cited
"Iran's Economy." DTIC Online, www.dtic.mil/docs/citations/ADA486511. http://www.dtic.mil/dtic/tr/fulltext/u2/a486511.pdf
Maloney, Suzanne. "Sanctioning Iran: If Only It Were So Simple." The Washington Quarterly, vol. 33, no. 1, 2010, pp. 131-147. http://www.fletcher.tufts.edu/~/media/Fletcher/News%20and%20Media/2010/Jan/Op-Ed/Maloney%2001%2010.pdf
O'Sullivan, Meghan L. "Iran and the Great Sanctions Debate." The Washington Quarterly, vol. 33, no. 4, 2010, pp. 7-21. http://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/publication/twq10octoberosullivan.pdf
