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The Iranian Economy in the Twentieth Century: A Global Perspective

Published online by Cambridge University Press:  01 January 2022

Hadi Salehi Esfahani  and
M. Hashem Pesaran
Hadi Salehi Esfahani
Affiliation:
University of Illinois at the Urbana-Champaign
M. Hashem Pesaran
Affiliation:
University of Cambridge and USC
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Abstract

This paper examines the transformation of the Iranian economy through the twentieth century within a global context. At the start of that century, the Iranian economy had long remained stagnant, poor, and largely agrarian, with a marginal role in the world economy. By the turn of the twenty-first century, Iran had transformed into a complex and relatively large economy with important consequences for the economies of the Middle East and other parts of the world. While the initial conditions and the evolution of domestic institutions and resources played major roles in the pace and nature of that transformation, relations with the rest of the world had crucial influences as well. This paper focuses on the latter forces, while taking account of their interactions with domestic factors in shaping the particular form of economic development in Iran. We study the ways in which the development of the Iranian economy has been affected by international price movements and by the ebbs and flows of trade, investment, and economic growth in the rest of the world. In considering these effects, we also analyze the role of domestic political economy factors and policies in enhancing or hindering the ability of domestic producers to respond to external challenges and opportunities.

Type
Articles
Information
Iranian Studies , Volume 42 , Issue 2 , April 2009 , pp. 177 - 211
Copyright
Copyright © The International Society for Iranian Studies 2009

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Footnotes

We would like to thank Ahamd R. Jalali-Naini and the organizers and the participants of the conference on Iran and Iranian Studies in the 20th Century (October 2007) at the University of Toronto for encouragement and useful comments.

References

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25 Karshenas, Oil, State, and Industrialization in Iran, 198–205.

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29 Iran has one of the highest rates of emigration of people with university degrees, see William J. Carrington and Enrica Detragiache, How Big is the Brain Drain? International Monetary Fund (IMF), Research Department, Working Paper No. 98/102, 1998. See also the discussion in Amid, Javad and Hadjikhani, Amjad, Trade, Industrialization and the Firm in Iran: The Impact of Government Policy on Business (London, 2005), 89Google Scholar.

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31 Pesaran, “Economic Trends and Macroeconomic Policies in Post-Revolutionary Iran.”

32 Amid and Hadjikhani, Trade, Industrialization and the Firm in Iran, Chapters 7 and 8.

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34 Bharier, Economic Development in Iran, Chapter 6, Table 3.

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42 It is well known that trade as share of GDP depends on country size and many other factors. However, controlling for those factors does not change the results of our observations here. See Hadi Salehi, Esfahani and Lyn, Squire, “Explaining Trade Policy in the Middle East and North Africa,” The Quarterly Review of Economics and Finance, 46, no. 5 (2007): 660–684Google Scholar.

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44 Esfahani and Squire, “Explaining Trade Policy in the Middle East and North Africa.”

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