Political economy
Mahsa Karimi; Hossein Raghfar
Abstract
The issue of underdevelopment in Iran has long been marked by a paradoxical situation. On the one hand, there is broad consensus on the necessity of development to achieve social welfare; on the other hand, there is no clear theoretical or political agreement on how to realize it. Contemporary theories ...
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The issue of underdevelopment in Iran has long been marked by a paradoxical situation. On the one hand, there is broad consensus on the necessity of development to achieve social welfare; on the other hand, there is no clear theoretical or political agreement on how to realize it. Contemporary theories of underdevelopment identify inequality as the primary factor underlying development failures, emphasizing that power imbalances between the state and society play a central role in exacerbating inequality. In this respect, the present study examined the role of power relations between elites and non-elites in reproducing, mitigating, or constraining unjustified inequalities in Iran. The analysis relied on an institutional approach and employed a combined theoretical framework derived from main scholarship in the field. According to the findings, inequality in the distribution of power, wealth, and social status largely results from the absence—or weakness—of a stable and institutionalized balance of power between the state and society. Periods characterized by political consolidation and weakened accountability mechanisms are associated with rising inequality, whereas deviations from political homogenization tend to coincide with, albeit limited, reductions in inequality. The study argued that moving beyond the status quo and advancing toward sustainable development would require profound institutional restructuring and the establishment of the shackled Leviathan—a state that is capable of effective policy implementation, committed to the rule of law, and subject to democratic accountability. Such a configuration, conceptualized as a strong state–strong society equilibrium, constitutes a necessary condition for reducing inequality and achieving inclusive growth in Iran.
Introduction
The issue of development in Iran, despite broad public consensus on its necessity, remains mired in ambiguity and failure. A key driver of this failure is the persistence of unjustified inequalities. In this regard, the present research aimed to address the following questions: what constitutes the primary determinant of inequality in Iran? And how can it be resolved to enable meaningful development? The analysis adopted an institutional approach to examine how the structure of political power distribution (i.e., the mode of interaction between the state and society) influences the state’s capacity to implement policies aimed at reducing inequality, and ultimately shapes wealth distribution. The study covered the period of 2005–2021, as it encompassed various phases of political consolidation and changes in governance structures, thus providing an ideal context for the current inquiry. Leading theoretical contributions in development studies identify the imbalance of power and wealth between elites and non-elites as the core of the crisis. Accordingly, the current analysis merits attention as it aimed to identify the fundamental factor generating inequality in Iran and outline the mechanisms for addressing it.
Materials and Methods
The present study adopted a descriptive–analytical method to address the research problem. The data was primarily drawn from macroeconomic indicators for the period 2005–2021. Indicators such as budget compliance, the democracy index, and the rule of law index were used to measure the state’s executive capacity. In addition, the misery index, corruption index, and the dollar value of the monthly wage were analyzed in order to assess the state of power balance. Finally, the Gini coefficient and net job opportunities were examined to evaluate the impact of different types of Leviathan on inequality.
Given the complexity of the topic, a single theoretical model could not fully account for the analysis required. Therefore, a combined theoretical model was used to derive explanation, prediction, and prescription. It was first necessary to examine the political order prevailing in the country during the period under investigation. To this end, the theoretical framework of Douglas North was employed, which explains the transition from a limited-access order to an open-access order—a transition that requires the rule of law. Moreover, Fukuyama’s tripartite model (effective state, the rule of law, and democratic accountability) was incorporated to assess the state’s executive capacity. Acemoglu and Robinson, while recognizing the importance of state executive capacity, argue that the core of power balance formation lies in the creation of a shackled Leviathan. In a shackled Leviathan, power is balanced both among elite interest groups and between elites and non-elites. Finally, by examining changes in power between the state and society, this study analyzed the persistence of unjustified inequalities in Iran.
Results and Discussion
According to the findings, Iran’s political economy during the period under review was strongly shaped by fluctuations in the balance of power between the state and society. During periods characterized by power consolidation and the weakening of oversight institutions, the government tended to expand its share of power and control over wealth. The results indicated that any erosion of the balance of power is directly linked to the reproduction of economic inequality and increased pressure on the middle and lower strata of society. Conversely, during periods of reduced power consolidation, improvements in the balance of power were evident, which led to a limited reduction in inequality. The findings suggest that the persistence of unjustified inequalities in Iran’s political economy stems not solely from the structural characteristics of the economy, but primarily from the failure to establish a stable and institutionalized balance of power between the state and society. When power shifts toward strengthening accountable institutions and upholding the rule of law, the scope for the unjust distribution of resources diminishes.
Conclusion
Development in Iran requires profound institutional reform and a transition toward the strong state–strong society model. This model, equivalent to the shackled Leviathan in institutional literature, envisions a state capable of effectively implementing policies (a strong state) while being tightly constrained by democratic accountability mechanisms and the rule of law (shackled). Such a balance is essential for reducing inequality and achieving inclusive growth.
Majid Aghaei; Mahdieh Rezaghoizadeh
Abstract
The purpose of this study is to measure the effect of consumption of different kinds of energy carriers in Iran, which caused poverty and inequality in the process of economic, social and cultural development of countries. For this purpose, we use annual data from 1984 to 2010 through a simultaneous ...
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The purpose of this study is to measure the effect of consumption of different kinds of energy carriers in Iran, which caused poverty and inequality in the process of economic, social and cultural development of countries. For this purpose, we use annual data from 1984 to 2010 through a simultaneous equations model using Two-Stage Least Square (2SLS) and Three-Stage Least Square (3SLS) estimators. The results indicate that the effect of various energy carriers on inequality is different. Gasoline consumption leads to inequality enhancement but natural gas and electricity consumption lead to inequality reduction. Fuel oil, kerosene and gasoil have the different effects on inequality due to different indexes of inequality. On the other hand, energy carrier consumption leads to poverty reduction and natural gas and electricity are more effective to reduce poverty. Thus, the direct effect of energy consumption on poverty is confirmed. Totally, the results indicate that the indirect effect of all energy carriers on poverty trough inequality reduction is not confirmed, though all energy carriers on economic growth has a positive effect, and the indirect effect of economic growth on poverty reduction is confirmed.
Hossein Raghfar; MirHossein Mousavi; Batool Azari Beni
Volume 18, Issue 56 , October 2013, , Pages 41-71
Abstract
Education is considered as a significant determinant of earnings inequality; however, there are sensible differences in the educational attainment for individuals. This paper examines absolute mobility between groups of educational levels and the persistency of inequality of opportunities in ...
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Education is considered as a significant determinant of earnings inequality; however, there are sensible differences in the educational attainment for individuals. This paper examines absolute mobility between groups of educational levels and the persistency of inequality of opportunities in the economy of Iran. For this purpose, Households’ Survey Data over 1988 to 2011 are used to organize pseudo-panel data and to estimate nonlinear dynamics of population in Iran. Our results reveal that the inequality opportunity between generations with higher education is less than that of between generations with lower education.Also inequality is decreasing over time, but its speed is very low.
Esmaiel Abounoori; Reza Abbasi Ghadi
Volume 9, Issue 30 , April 2007, , Pages 23-52
Abstract
Economic growth in addition to the direct income effect on poverty has an indirect distribution effect. The main purpose of this research is to estimate the net economic growth effect on poverty in Iran during the periods 1982-1988, the first socio-economic development plan (1989-1993), the second plan ...
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Economic growth in addition to the direct income effect on poverty has an indirect distribution effect. The main purpose of this research is to estimate the net economic growth effect on poverty in Iran during the periods 1982-1988, the first socio-economic development plan (1989-1993), the second plan (1995-1999), and a part of the third plan (2000-2001). The results indicate that poverty increased during 1982-1988. Decomposing poverty shows that the reduction in inequality alleviated the level of poverty due to the economic recession. This implies that the reduction in the share of the lower income groups were relatively smaller than that of the higher income groups. Although the poverty increased in this period,, the poor has suffered less relative to the rich. In general, throughout the economic plans era, growth has not been pro-poor, except in the third development plan; the increase in the share of higher income groups has always been relatively more than that of the lower income groups.
Khosrow Piraee; Azadeh Ghana'atian
Volume 8, Issue 29 , February 2007, , Pages 113-141
Abstract
Economic growth and poverty alleviation have been among the most important government policies in Iran for the past three decades. This paper examines the effect of economic growth on the poverty reduction in Iran using various methodologies and approaches for the period 1995-2003 Main findings of the ...
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Economic growth and poverty alleviation have been among the most important government policies in Iran for the past three decades. This paper examines the effect of economic growth on the poverty reduction in Iran using various methodologies and approaches for the period 1995-2003 Main findings of the paper show that poverty incidence in urban and rural areas of Iran has declined, however, the intensity of poverty has declined in urban, but increased in rural areas. Furthermore, measurements of indices such as the poverty incidence,, poverty-growth curves, and the poverty equivalent growth indicate that economic growth in most years has been weakly pro-poor in both urban and rural areas, confirming the trickle down effect of growth.
