Iran operates as a theocratic republic where ultimate authority rests with a supreme leader who oversees security services, foreign policy, and major constitutional decisions. The system combines religious oversight with a republican framework, including elected institutions such as a president and parliament, yet practical power is mediated through unelected bodies like the Guardian Council and the Expediency Discernment Council. Political pluralism is constrained by restrictive laws, censorship, and control over media and civil society. The judiciary and security apparatus exert broad influence over political life, limiting dissent and shaping policy through opaque processes. Foreign policy aims and domestic priorities reflect a strategic posture in the region, balancing ideological commitments with pragmatic calculations. Governance is highly centralized, with bureaucratic procedures that can be opaque and slow to adapt, contributing to policy incoherence and implementation delays. Corruption and patronage networks intersect with economic and political life, undermining accountability and eroding public trust.
Colonial history
Not colonized, but influenced by various empires
Former colonizer
N/A
Government type
Islamic Republic
Legal system
Civil law influenced by Islamic law
Political stability
Moderate
The economy features heavy state involvement and a reliance on hydrocarbon revenues, with limited space for private enterprise and market competition. Sanctions and international isolation constrain access to finance, technology, and international markets, shaping growth patterns and investment incentives. Diversification attempts face structural hurdles such as subsidy regimes, inflationary pressures, and currency volatility that complicate planning for businesses. The industrial base includes energy intensive sectors, petrochemicals, manufacturing, and services, yet productivity gaps and inefficient state management limit competitiveness. Informal and shadow economies persist, and talent migration reduces human capital available for innovation. Import dependence for goods and critical inputs intersects with external policy and logistical constraints. Public investment is channeled through prioritized sectors, yet long bureaucratic cycles can slow project completion and raise project risk.
Currency name
Iranian Rial
Economic system
Mixed economy with significant state ownership
Informal economy presence
Significant informal sector
Key industries
Oil and gas, automotive, petrochemicals, agriculture, textiles
Trade orientation
Exports predominantly to Asia, especially China
Iran sits in a climatically diverse and geopolitically sensitive region, with extensive desert zones, mountain ranges, and critical watershed areas. Water scarcity and mismanagement have amplified stress on agriculture, industry, and urban supply, intensifying competition over shared resources. Seismic activity and fault lines pose persistent natural hazard risks, influencing building codes and disaster preparedness. Air and water pollution, deforestation, and land degradation threaten ecosystems and public health. Climate change intensifies drought, heat, and variability in rainfall, challenging infrastructure and agricultural sustainability. Cross-border environmental issues affect neighboring countries and complicate regional cooperation. Land use and infrastructure development intersect with environmental protection, sometimes leading to tradeoffs between growth and resilience.
Varies from arid and semi-arid to temperate and subtropical
Continent
Asia
Environmental Issues
Air pollution, water scarcity, deforestation, desertification
Landlocked
No
Natural Hazards
Earthquakes, floods, droughts
Natural resources
Oil, natural gas, coal, minerals
Terrain type
Mountains, plains, and deserts
Social dynamics show a young population with aspirations for mobility, education, and improved living standards, yet disparities persist across regions and genders. Gender norms and legal restrictions shape access to employment, education, and public life for women, while activism and advocacy face legal and social pushback. Ethnic and religious minorities encounter discrimination and limitations on cultural expression and political participation. Poverty, unemployment, and rising living costs affect social stability, particularly in urban peripheries. Public health, housing, and social services face strain amid demographic pressures, while corruption can undermine service delivery. Civil society space remains constrained, with limits on assembly and independent media, complicating checks and accountability.
Cultural heritage
Rich cultural traditions, Persian literature, art, architecture
Driving side
Right
Education system type
Public and private education available, high literacy rate
Islam (Shia), with minor communities of Christians, Jews, Zoroastrians, and Baha'is
Official languages
Persian (Farsi)
Infrastructure shows uneven development, with reliable energy and transportation networks concentrated in major urban areas but weaker in rural regions. The electricity system faces reliability and efficiency challenges, while water and waste management require modernization and investment. Telecommunication infrastructure supports broad internet access, though censorship, surveillance, and content control raise concerns about digital rights and expression. An innovation ecosystem exists in universities and private firms, but access to capital, regulatory hurdles, and sanctions hamper scaling of local tech ventures. Research and development capacity is growing, yet collaboration with international partners is constrained by policy and external pressure. Renewable energy projects, such as solar and wind, are pursued to address energy security, though grid integration and funding models remain evolving. The technology sector faces import restrictions that affect software, hardware, and advanced equipment necessary for sophisticated industries.
Internet censorship level
High
Tech innovation level
Growing, with increasing focus on technology startups and digital transformation
Transport system type
Road, rail, and air transport, with developing infrastructure
Iran hosts a large population, with the total number reported at about 91.6 million in 2024, placing it 17th globally by population size. The country’s demographic profile combines a relatively moderate birth rate with a long life expectancy, signaling a potential demographic dividend if job creation keeps pace with the young and growing workforce. The crude birth rate is 13.0 per 1,000 people in 2023, while the crude death rate sits at 4.67 per 1,000 in 2023. Life expectancy at birth stands at 77.7 years (2023), reflecting substantial health improvements relative to many peers in the region. The under-5 mortality rate is 11.8 per 1,000 live births (2023), indicating progress in child health but also room for further reductions through targeted health and nutrition programs. Net migration reached about 190,156 in 2024, a positive inflow that can support labor supply and skills, although it also underscores pull and push factors affecting the country’s demographic dynamics. Unemployment, at 9.09% in 2022, highlights a challenge in absorbing a sizable and potentially youthful labor force into productive work, a dynamic that has important implications for social policy and long-term growth.
On health spending, current health expenditure accounted for 5.35% of GDP in 2022, with domestic general government health expenditure per capita (purchasing power parity) around $475 in 2022. These figures suggest a modest but important level of public health financing, complemented by private spending and out-of-pocket payments. The combination of a high life expectancy with ongoing mortality and malnutrition pressures indicates a health system that performs reasonably well in some areas while facing access and equity challenges—particularly in rural or underserved communities. The data do not reveal comprehensive coverage of maternal and child health indicators beyond the under-5 mortality figure, but together with a relatively young population, there is a clear case for continued investments in primary care, immunization, nutrition, and preventive services to sustain health gains and economic resilience.
Economy
Iran’s per-capita income, measured at current US$, is about $4,771 in 2024, with GDP per capita adjusted for purchasing power parity (PPP) around $18,442, illustrating a lower-income profile in comparator terms but with social and structural characteristics that can support certain domestic markets and services. The economy faces elevated inflation at 32.5% in 2024, a rate that erodes purchasing power, complicates household budgeting, and adds costs for doing business. External vulnerabilities are evident in trade figures: exports of goods and services equal about 22.9% of GDP in 2024 while imports account for about 26.8% of GDP, indicating a trade-intensive economy that relies on external inputs and markets, yet remains sensitive to exchange-rate swings and sanctions regimes. Investment conditions are cautious, with net foreign direct investment inflows at 0.352% of GDP in 2023, reflecting barriers to capital deepening and technology transfer amid policy and geopolitical constraints. Research and development (R&D) intensity sits at roughly 0.727% of GDP in 2021, signaling a modest but meaningful commitment to science and innovation as a source of long-run productivity gains. Notable indicators of knowledge and higher-value activity include about 10,210 patent applications by residents in 2021 and high-technology exports totaling around $206 million in 2022, highlighting pockets of advanced production and intellectual property activity amid broader economic headwinds.
Public governance and business climate conditions exert additional influence. The governance indicators show relatively weak regulatory quality (-1.69) and control of corruption (-1.23), along with negative scores for government effectiveness (-1.02) and rule of law (-1.06), which together can raise doing-business costs, undermine contract enforcement, and reduce confidence among investors and entrepreneurs. Military expenditure in 2023 was about $10.28 billion (current US$), ranking 25th globally, a sizable allocation that competes with social and productive spending unless offset by revenue and strategic priorities. The economy also features a substantial, albeit uneven, technology footprint: while exports remain modest in value, the presence of patent activity and high-tech exports points to specialized capabilities that could underpin a broader diversification strategy if macro stability and governance improve.
Trade and Investment
Trade dynamics show that exports of goods and services as a share of GDP reached 22.9% in 2024, while imports rose to 26.8% of GDP in the same year, indicating an economy that is integrated with global markets but with import-intensive demand and sensitivity to external conditions such as sanctions, commodity prices, and exchange-rate movements. Foreign direct investment net inflows were 0.352% of GDP in 2023, suggesting a cautious investment climate where capital inflows respond to policy credibility, regulatory predictability, and geopolitical risk. Iran demonstrates some technology-oriented trade activity, with high-technology exports valued at approximately $206 million in 2022 and residents filing roughly 10,210 patent applications in 2021, signaling capabilities in advanced areas despite broader structural constraints. The logistics environment presents further friction, with a Logistics Performance Index score of 2.4 in 2022 on a 1-to-5 scale, indicating that trade-related infrastructure and processes could be more efficient to reduce costs and time for exporters and importers.
Overall, the trade and investment landscape reflects a bridge between notable human capital and selective innovation, and a business climate shaped by macro volatility and governance challenges. If macro stability improves and regulatory reforms reduce friction, Iran could leverage its patent activity and high-tech exports to deepen specialization in knowledge-intensive sectors, while maintaining its role in regional and global value chains that depend on a diversified, open trade regime.
Governance and Institutions
Governance indicators for Iran point to persistent weaknesses in several dimensions. Political stability and absence of violence/terrorism score -1.69 in 2023, regulatory quality is -1.69, and rule of law is -1.06, with control of corruption at -1.23 and government effectiveness at -1.02. These negative values, relative to global baselines, suggest ongoing challenges in political risk, policy predictability, judicial independence, contract enforcement, and corruption control. Such conditions can raise the cost of capital, complicate business planning, and deter long-term investment. The logistics environment reinforces these governance signals, with a Logistics Performance Index of 2.4 (2022), reflecting constraints in infrastructure, border procedures, and efficiency of trade-related processes.
Against these governance headwinds, Iran exhibits pockets of resilience in science and technology, evidenced by populous engagement with patent activity and a measurable level of high-technology exports. This indicates a substantive base of human capital and knowledge work that could, with stronger institutions, translate into higher productivity and export sophistication. Strengthening rule of law, reducing corruption, and improving policy coherence would improve business confidence, attract higher-quality investment, and support more inclusive growth that aligns with social and development goals.
Infrastructure and Technology
Iran benefits from a sizable internet user base, with 79.6% of the population online in 2023, indicating broad digital connectivity that can underpin e-services, education, and digital entrepreneurship. However, technology investment remains modest: R&D expenditure stands at about 0.727% of GDP in 2021, and patent activity reached around 10,210 applications by residents in 2021, alongside high-technology exports of roughly $206 million in 2022. These figures reveal a country capable of targeted, science-based output even as broader innovation funding and commercialization ecosystems could be strengthened.
Infrastructure and energy dimensions show mixed progress. Renewable energy consumption is very low, at 0.9% of total final energy consumption in 2021, indicating heavy reliance on fossil fuels and a significant opportunity for diversification to enhance energy security and reduce exposure to price swings. The current share of government and private health expenditure (5.35% of GDP) and per-capita public health investment (~$475 PPP in 2022) reflect a health and social-service ecosystem that can be expanded to support a more productive economy. On the environmental side, water stress is extreme, with freshwater withdrawals at 81.3% of renewable resources (2021), underscoring critical water-management challenges that intersect with urban planning, agriculture, and industrial activity. The Logistics Performance Index at 2.4 (2022) further indicates room to strengthen transport, customs, and border efficiency to support faster and cheaper trade, particularly as the country looks to leverage its digital base for new services and export-oriented growth.
Environment and Sustainability
Iran faces substantial environmental and resource pressures. The level of water stress—water withdrawals as a share of available freshwater resources—reaches 81.3% in 2021, signaling acute vulnerability to drought and climate variability across agriculture, households, and industry. Per-capita greenhouse gas emissions amount to 11.0 tonnes of CO2 equivalent in 2023, illustrating a relatively high carbon intensity consistent with fossil-fuel–driven energy use and the need for decarbonization efforts. Food security indicators show the prevalence of undernourishment at 6.5% of the population in 2022, highlighting that while overall health outcomes are improving, nutrition remains a constraint for a portion of society. Renewable energy contributes only 0.9% of total final energy consumption in 2021, underscoring a large opportunity to shift toward cleaner energy sources and reduce dependence on hydrocarbons.
The environment and sustainability picture is intertwined with macroeconomic and governance dynamics. Water scarcity and climate risks amplify pressures on agriculture and urban systems, while energy transition, if pursued with policy stability and investment in grid and storage capacity, could lower carbon intensity and reduce exposure to external energy-market shocks. The sizable human capital and scientific outputs—evidenced by patent activity and R&D foundations—offer a foundation to accelerate innovation-led transformations in energy efficiency, water management, and climate-resilient infrastructure, provided governance reforms and macro stability align with growth objectives. In sum, Iran’s environmental outlook features acute resource constraints and high vulnerability, but also meaningful opportunities to pursue sustainable development through targeted investments in water, energy, and technology sectors.
Iran profile