The Struggle for Development in Iran
The Evolution of Governance, Economy, and Society
Pooya Azadi, Mohsen B. Mesgaran, Matin Mirramezani


Contents and Abstracts
1 Introduction
chapter abstract

The aim of this book is to present a multidimensional and critical analysis of Iran's path of development over its troubled history of the past half century. The book has an ambitious scope—covering a wide array of subjects including governance, political economy, macroeconomy, demography, education, energy, food, and the environment. The data used throughout this manuscript was meticulously collected from hundreds of sources over several years.

2 Governance
chapter abstract

This chapter first discusses the theoretical background for measuring the quality of governance. It then applies the described framework to evaluate the quality of governance in contemporary Iran and explains why Iran's major challenges and shortcomings are deeply rooted in a lack of effective governance. The impact of ineffective governance can be seen in virtually all major challenges facing Iran: a sluggish economy, low employment ratio, chronic high inflation, water crisis, troubled pension system, human capital flight, and eroded social trust. As the state struggles to reform itself, the intensification of economic and social crises is leading Iran to an important turning point in its history.

3 Demographic Trends
chapter abstract

This chapter presents the past trends in Iran's population dynamics and discusses future projections. It describes the changes in population size and characteristics over the past half century, with a particular focus on patterns of fertility, age composition, marriage, urbanization, and population distribution across provinces. It also argues how demographic trends will continue to play a central role in Iran's future trajectory of development.

4 Labor Force and Human Capital
chapter abstract

The size and characteristics of the labor market in Iran have been affected by the interplay between demographic trends, the rise in the educational attainments of the society, macroeconomic factors, flows of migration from rural to urban areas, as well as international migration to and from Iran. This chapter describes the main characteristics of the labor market in Iran and its evolution since 1960. It also provides an analysis of the major developments in the area of education and human capital and evaluates their impact, or lack thereof, on economic growth in Iran.

5 Economy
chapter abstract

This chapter provides an overview of the major trends in the Iranian economy over the past half century by focusing on patterns of economic growth, shares of different sectors in the economy, employment, inflation, inequality, capital formation, and international trade. The final part of this chapter sheds light on some of Iran's most pressing economic challenges by quantifying their magnitudes and future trajectories.

6 Financial Sector
chapter abstract

This chapter explains the evolution of Iran's financial sector with a focus on the performance of the Central Bank of Iran (CBI) in terms of price stability and oversight on commercial banks and credit institutions. It discusses the performance and characteristics of commercial banks with a focus on financial depth and share of different sectors of the economy in outstanding bank loans. Finally, it presents an overview of the role of Iran's sovereign wealth fund (National Development Fund of Iran, NDFI) in the management of oil revenues.

7 Energy Sector
chapter abstract

This chapter provides an overview of Iran's energy landscape, starting with the trends in oil and gas production, domestic consumption, and exports. It also evaluates the historical role that oil revenue has played in financing public expenditures and discusses its future potential in light of the shifting paradigm of the global oil markets from scarcity to abundance. It then explains how today's sheer volume of produced natural gas is allocated to different uses and the inefficiencies associated with its misallocations. Finally, it delineates trends in demand and supply sides of the electricity market and analyzes Iran's controversial nuclear program from an economic standpoint.

8 Agriculture Sector
chapter abstract

This chapter is concerned with Iran's water crisis, which is one of the most consequential issues that the current and future generations of Iranians have to deal with. It begins with explaining historical trends in domestic food supply, focusing on agricultural water consumption, cultivated area, patterns of irrigation, and the amount and composition of agricultural output. It then shows how historical demand for food has been affected by changes in population and the per capita income. The chapter ends with an analysis of future food demand and the increasing need for the import of food warranted by the need to reduce water consumption.

9 Migration and Brain Drain
chapter abstract

This chapter takes a close look at the issue of migration and brain drain in Iran. The first part of the chapter presents new sets of data compiled from various sources to shed light on how the number of Iranian emigrants, international students, scholars, and asylum seekers has changed over the past half century. We then explain the drivers of migration and discuss the obstacles that prevented Iran's highly successful diaspora from taking part in the development of their homeland.

10 Research and Development Policy
chapter abstract

This chapter provides a critical analysis of the Islamic Republic's claim of miraculous achievements in the realm of science and technology. This claim plays a central role in the regime's broader propaganda to create the impression that under its jihadi-style approach to development, Iran has joined the club of the most technologically advanced countries of the world. We, however, argue that the drastic increase in the quantity of Iran's scientific publications stemmed from the state's productionist research policies which consider publication as an end in itself with no implications for technological advancement and economic well-being of the nation.

11 Conclusion: The Path Forward
chapter abstract

The final chapter of this book discusses the trajectory of development in Iran based on insights and data presented throughout the book under three different scenarios of business as usual, reforms within the Islamic Republic, and a more optimistic paradigm triggered initially by transformation of political institutions to improve the rule of law and democratic accountability as an entry point to future development.