February 07-2014
The Islamic Republic continues to be ranked in the bottom 10 countries of the world so far as economic freedom is concerned in the annual index issued last week by the Heritage Foundation and The Wall Street Journal.
This year Iran was ranked 173rd of the 178 countries charted. The only countries rated as having less economic freedom than Iran are Eritrea, Venezuela, Zimbabwe, Cuba and—in last place as usual—North Korea.
The ranking is based on an evaluation of 10 elements of economic freedom in each country such as how open markets are, the extent of property rights, the level of government spending and the extent of regulation.
Given its sponsors, the index comes at the issue from a conservative standpoint.
This year Iran fell four slots in the ranking, reflecting what the raters said was deterioration in six of the 10 economic freedoms including labor freedom, monetary freedom, trade freedom, and freedom from corruption.
Iran is ranked last out of the 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 in the Index, its economic freedom has advanced only marginally—by four points on a 100-point scale. 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 in the ranks of the “repressed” economies.
The authors say, “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.”
The existence of the report was not censored in Iran, but editors chose to ignore Iran’s dismal rating. The Fars news agency carried a story saying that the United States had fallen out of the top 10 for the first time in the 20 years of the rankings. But it said not a word about Iran.
The Iran Daily carried a straight story saying that Hong Kong was rated the freest economy in the world this year as it has been in every year of the report. The newspaper also said nothing about Iran.
The economic freedom report on Iran said, “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…. The effects of sanctions imposed by the US and European Union in 2012 in response to Iran’s illicit nuclear weapons program have been devastating…. Corruption is pervasive. The hardline clerical establishment has gained great wealth through control of tax exempt foundations that dominate many economic sectors.”