Why did Iran become a poor country despite having oil? Iran’s economic struggles, despite its vast oil reserves, can be attributed to a combination of factors:

Economic Mismanagement and Corruption:

Over the decades, Iran has faced issues with economic mismanagement and corruption within both the public and private sectors. Inefficiencies and lack of transparency have hindered economic development.

Sanctions:

International sanctions, particularly by the United States and its allies, have severely impacted Iran’s economy. These sanctions have targeted crucial sectors, including oil exports, financial institutions, and access to global markets, resulting in reduced revenue and limited economic growth.

Political Instability:

The 1979 Islamic Revolution and subsequent political changes have led to periods of instability and conflict, both internally and with other nations. This has deterred foreign investment and disrupted economic activities.

War and Regional Conflicts:

The Iran-Iraq War (1980-1988) devastated Iran’s economy, causing significant infrastructure damage and diverting resources from development to military expenditure. Ongoing regional conflicts have also strained the country’s resources.

Dependence on Oil:

Iran’s heavy reliance on oil exports has made its economy vulnerable to fluctuations in global oil prices. When prices drop, the country’s revenue decreases significantly, affecting public spending and economic stability.

Internal Policies and Restrictions:

Government policies, such as subsidies, price controls, and restrictions on private enterprise, have sometimes stifled economic growth and innovation. The state-dominated economy has limited the role of the private sector.

Brain Drain:

Political repression and economic challenges have led to a significant emigration of educated and skilled Iranians, which has negatively impacted the country’s human capital and innovation potential.

Lack of Diversification:

Iran’s economy is not well-diversified, relying heavily on oil and gas exports. This lack of diversification makes the country more susceptible to external economic shocks.

These factors, combined, have contributed to Iran’s economic difficulties despite its substantial oil wealth.