The state-led industrialization in Iran, 1963-1978

This dissertation provides a policy analysis of the economic role of the state in the formation of industrial development in Iran during the 1960's and 1970's. It examines the various outcomes of capital formation based on an internal market-import-substitution industrialization strategy (ISI) as applied to the textile and petrochemical industries. The central dilemma in this study is determining whether sectoral economic base, the structure of social forces or the character and strategies of the state (or some combination thereof) can be held responsible for constraining the process of change in Iran.;This study has utilized Michael Shafer's sectoral analysis model of political economy to refer to the characterization and limitation of Iran's leading sector, and its corresponding distinctive state structure. Albert O. Hirschman's sectoral focus on the economic connection of sectors of the economy has been of particular importance to the cases selected (textile and petrochemistry).;This study maintains that the identity and legitimacy roots of political leadership in Iran, its vested interests, and control of the leading economic sector, reinforced an exclusionary political and economic structure that was resistant to economic diversity and democratic representation. It attributes a heavier weight to the dominating role of the state and its character in the process of industrial development and social transformation. It concludes that in the period of 1963-1978, state intervention and the adaptation of a mode of capital accumulation based on ISI strategy failed to generate an integrated domestic economy and improve the status of Iran's economy in the international market. The review of the two cases examined suggests that by the end, compared to the manufacturing sector, the value-added and export contribution of traditional non-oil sectors were higher than the inefficient, internal market mode of manufacturing developed by the state.;The industrial growth and expansion in the size of manufacturing output in Iran have often been equated with industrialization. Industrialization, however, involves technological change, the capacity to generate linkages and spread technological changes to other sectors of economy. By the end, it was the lack of investment in human capital, rather than physical capital, that accounted for the gap between growth and development.