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Oil-rent Boom in Iran?

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  • Beck, Martin

Abstract

The present article aims to analyze the effects of high oil prices since 2003 on Iran. The theoretical basis of the analysis is the rentier state approach, the basic element of which is that rents are at the free disposal of the rentier. Empirically, the paper examines the issue areas of foreign policy, domestic policy and economic policy. After proving that the oil price - despite fluctuations - has constantly been at a high level in the first decade of the twenty-first century, the discussion demonstrates that Iran has used the increased rent income to support a populist policy. In terms of economic policy, the regime has pursued a redistributive strategy. The country's foreign policy, particularly the ostentatiously pursued atomic program, has been very expensive since it provoked sanctions whose costs were initially balanced only by high rent income. Yet, in his first term, Ahmadinejad failed to prepare Iran for the situation that has occurred as a result of the global financial crisis: the redistributive policy of the regime has meant that an oil price below US$70 or US$75 now constitutes a severe challenge for the Iranian state budget.

Suggested Citation

  • Beck, Martin, 2009. "Oil-rent Boom in Iran?," GIGA Working Papers 111, GIGA German Institute of Global and Area Studies.
  • Handle: RePEc:zbw:gigawp:111
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    File URL: https://www.econstor.eu/bitstream/10419/47729/1/631974946.pdf
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    References listed on IDEAS

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    1. Akbar E. Torbat, 2005. "Impacts of the US Trade and Financial Sanctions on Iran," The World Economy, Wiley Blackwell, vol. 28(3), pages 407-434, March.
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    Cited by:

    1. Tohid Atashbar, 2013. "Iranian Disease: Why a Developing Country's Government Did Not Listen to Economists' Advices," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(3), pages 732-760, July.

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