ABSTRACT
After the war with Iraq ended, political stability improved, economic reforms were undertaken and the government tried to remove major infrastructure bottlenecks in the economy (Table 7.8). These reforms brought about greater investment incentives in both the private and public sectors. However, expanded foreign exchange supplies played a key role in improving economic performance. Quantitative import restrictions were reduced giving the private sector an opportunity to complete delayed industrial projects. With an increase in budgetary Rial revenues due to a depreciation of the national currency, the government also increased the volume of its investments in infrastructure and industrial affairs (Table 7.1). Thus, after 1988, industrial capacity utilization improved and capital accumulation in the industrial sector too rose. During this period, incremental capital output ratio contracted, indicating increased capital efficiency in comparison with the War period (Table 7.6).
