Iran is not a poor country. It is highly urbanized and modern, with a sizable middle class. Oil revenues, which Iran has in abundance, should be channeling plenty of hard currency into the state’s coffers, and in fact the economy’s overall rate of growth is healthy and rising. But as Parvin Alizadeh, an economist at London Metropolitan University, explained to me, what ultimately matters is how the state spends its influx of wealth. The Iranian government has tried to create jobs swiftly and pacify the people by spending the oil money on new government-run projects. But these projects are not only overmanned and inefficient, like much of the country’s bloated and technologically backward public sector; they also increase the demand for consumer goods and services, driving up inflation.
