Maintaining a sustainable and relatively high economic growth rate is a major short- and long-term challenge facing Iran. To keep up the growth momentum, Iran not only must replace and upgrade its aging capital equipment in both the oil and non-oil sectors, but also needs to invest heavily in new industries, technology, human capital, and infrastructure. Higher growth is a socially desirable objective since it raises per-capita income, at least in par with middle-income countries, and it provides the material resources for reducing poverty and promoting sustainable human development. Moreover, due to demographic and gender factors, the rate of growth of labor supply in the next decade is expected to be fairly high and a relatively high rate of economic growth is necessary to boost the demand for labor. A rapid population growth at the rate of 2.6 percent per annum increased the population from 26 million in 1966 to nearly 66 million in 2002. Population growth has recently slowed down and is estimated at 1.65 percent for the next decade. Yet, the growth rate of the working-age population will be significantly higher, about 2.6 percent. According to World Bank estimates, by 2010 total population will be 75.9 million. Working-age population will be 51 million—compared to an estimated 43 million at the end of 2002.