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3.2. POST-REVOLUTION DEVELOPMENT PROGRAMS (1989-2015)

3.2.1. Unplanned Years (1979-1988)

After Islamic revolution of Iran political instability emerged. The back-then government was not in a position to advance any framework to regulate economic mechanisms. But during 1979-1987, after transferring power from the Pahlavi regime to the Islamic Republic, important economic activities were carried out and led to income distribution and establishment of new vision and relations between politics and economics. Widespread confiscations, nationalization of banks, presence of large private companies and industries, and the replacement of inexperienced or less experienced managers created an uncontrollable situation. Agricultural land division policies, dissolution of a significant part of the agro-industry complex, also a major effort to build or restore

rural roads, supply agricultural institutions at subsidized prices and guarantee purchases, extremely changed rural regions. In that period, the breakout of the Iran-Iraq war had a negative impact on the socio-economic structure of Iran. In addition, war inevitably devoured a significant part of the country's resources which was to be spent on investment and increasing job opportunities.

Destruction of infrastructure, massive migration from war zones to central provinces and involvement of a significant portion of human recourse into war can be added to the list. According to Hadi Zonooz, at the same time, the demographic policies and the encouragement of fertility also are contradicted to declining trend of economic resources and had three major losses:

1. Poor household’s subsistence rate and per capita income decreased;

2. Government spending on health services and subsidies increased;

3. The young population has been delayed to enter labor market for two decades.

Regardless of the political and economic conditions prevailing in this period, international situation also was not very favorable. Extensive international sanctions and limited access to global markets hindered foreign investment attraction, technology transfer and created barriers to scientific and technical cooperation while worsening the country's economic management, especially in the area of poverty and inequality (Hadi Zonooz, 2009).

Verily, studies about magnitude of poverty and population below the poverty line after the revolution and before the start of the first program are limited. However, some of the available literature is mentioned in this section.

According to a study Khodadad-Kashi (2005), extreme food poverty rate based on two bases of 2179 kcal and 2300 kcal per day during 1984-1988 in urban areas was an average of about 64.02% per year and in rural areas has grown by 72.8 and 89.6 respectively which significantly higher than the annual rate of inflation, which means that in both urban and rural areas, poor population has increased on the basis of the extreme poverty line (Khodadad Kashi, F. &

Bagheri, F., 2005).

However, government faced serious problems because of war, including inflation, a sharp decline in oil revenues and a serious recession of production

process in the 1980s. Consequently, it had to revise the income distribution policies (Asadzadeh, A. and Paul, S., 2004).

According to Salehi's estimations, from revolution until the end of the war (1978-1988), rural poverty rate was not significantly reduced but urban poverty rate increased later on. Graph 3-1 shows population below absolute poverty line (Salehi-Isfahani, 2006) during the aforementioned period of time.

Figure 1, Population below absolute poverty line

(Salehi-Isfahani, 2006)

In one of the Management and Planning Organization’s published reports (2003) some of the key indicators of poverty and inequality during 1984 to 1989 are outlined as can be seen in 3-1 table.

Table 2: Average of poverty and inequality index (1984-89)

Management and Planning Organization of Iran, 2003

The above-mentioned report highlights the fact that high rate of population below absolute poverty line in rural versus urban during 1984-1989 is consistent with the results of most similar studies.

However, World Bank’s study which covers period 1986-1998 and which is calculated in terms of population below the poverty line (World Bank, 2011), shows that in 1986, about 27.3% of Iran's people were poor, which was reported for urban 20.9% and rural 34.9%. These estimations are more than population below the poverty line in compare with MPO of Iran. An important point is the lowering of the World Bank's benchmark for determining the poverty line compared to the study of the Higher Institute of Research.

At this level, it is worth remembering that Gini index is also important to study inequality during post-revolution and the start of first development. According to Babakhani et al. (2012), the Gini coefficient ranged from 0.3993 to 0.3967 between 1984-88 which means that there was not a significant change in income distribution between1984-1988. (Babakhani, M. and Ghasemi, R. and rafei, H.

and Raghfar, H. and Biglarian, A., 2012).

Hosseini and Ghaffari (2012) have estimated some indicators of poverty and inequality for years 1984-88, Gini index is presented in 3-2 Graph(Hooseini, M.

and Ghaffari, H., 2012).

Figure 2: Gini Coefficient, 1984-88

Hooseini & Ghaffari, 2006

According to this study, 1984 to 1988, Gini coefficient have not made a remarkable change for urban, but for rural areas raised from 0.4037 to 0.3807 during 1984-88. Although it is significant inequality, but is also shown relative improving. Hosseini and Ghaffari have also calculated some other indicators of inequality, such as Tile index and decile tenth-to-first ratio in which 10th decile/

1th decile for urban areas ranged from 21.28 in 1984 to 18 in 1988 and for rural have increased from 22.84 to 19.57 which indicates reduction trend inequality in study years (3-3 Graph).

Figure 3: Decile Ratio, Iran, 84-88

Hosseini & Ghaffari, 2006

Statistical Center of Iran (2013)21 also calculated these two indicators, Gini coefficient and the tenth to first decile ratio. Accordingly, total Gini coefficient from 0.4746 reached 0.519 in 1979 but after that, because of government's distributive policies, indicators were somewhat stabilized and even decreased. Graph 3-4 shows inequality indicators between 1979 and 1988 and the beginning of the first development plan.

21 https://www.amar.org.ir/Portals/0/Files/reports/g_jini_80-91.pdf

Figure 4 Total Gini Coefficient, Iran, 179-88

Statistical Center of Iran, 2013

Despite ambiguities in the status of poverty and inequality indicators before running first development program, Asadzadeh and Pal (2001) confirmed the mentioned study so that between 1982 and 1992, income inequality in rural and urban has diminished simultaneously increasing poverty.

According to Statistical Center of Iran (2013), the important indicator of the ratio of the income share of the top-down decile has significantly decreased in the three groups of urban, rural and total population during the years 1979 to 1988.

Particularly, the trend towards improving the income gap in rural area is more dramatic and has risen from 28 times in 1979 to 67.19 in 1988 which is important in the wake of war and other political and economic crises.

Nevertheless, Hadi Zonooz (2009) believes: "In the post-revolution period, government by giving priority to income distribution and ignoring the priority of economic growth, improved the housing, health, treatment and education of poor people, However, due to inefficient allocation of resources, economy suffered heavy losses (Hadi Zonooz, 2009)."