Can FDI be encouraged? An analysis of Iran's future economic prospects

Iran has enormous economic potential, with many valuable natural resources and a young population that provides both skilled labor and a consumer market for goods and services. However, that potential is currently unrealized in spite of extensive economic reforms since the early 1990s that were aimed at encouraging private investment in the non-oil sector, diversifying exports, and accelerating economic growth. One cause of Iran's economic problems is the lack of foreign direct investment (FDI). Iran's share of the world's FDI inflows has continuously declined since the 1979 Revolution. We analyze the causes of this decline and argue that positive economic signals and key structural changes are needed to attract FDI, thereby enabling the Iranian economy to prosper.