Prior to 1979, Iran's economic development was rapid. Traditionally an agrarian society, by the 1970s the country had undergone significant industrialization and economic modernization. This pace of growth had slowed dramatically by 1978 as capital flight reached $30 to $40 billion 1980 US dollars just before the revolution.
After the Revolution of 1979, Iran's government proceeded with 4 reforms:
- First they nationalized all industry, including the NIOC, and all Iranian banks.
- The new Constitution divided the economy in 3 different sectors, namely "State", "Cooperative" and "Private", with the majority being state-owned businesses.
- The Government started using central planning to control the economy, having the Supreme Leader, the President and Majlis creating 5-year socio-economic plans.
- The State took control of setting prices and subsidies.