Oil, State and the Rise of Auto Industry in Iran

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Abstract

Most theories of Developmental State assume that a successful industrial sector requires a state with certain characteristics such as: 1) autonomy; 2) bureaucratic integrity; 3) Internal cohesiveness; 4) dense ties with local firms. Iran has recently developed a dynamic auto manufacturing sector. Successfully producing more than 1.6 million units of vehicle per year, Iran is ranked as the world’s 11th largest auto manufacturer; higher than many countries in the Global North including the U.K. (13) and Italy (17). Strikingly, Iran's auto industry was developed in a country flush with capital-intensive natural resources, which provide little incentive for developing industrial sectors—the well-known phenomenon that economists coined "resource curse." Even more striking is the fact that such a massive industrial sector was developed in a state that cannot, by any means, be characterized as "developmental." This paper thus explains the success of developing a dynamic industrial sector in Iran despite "resource-course," and within a state that demonstrates strong patrimonial and predatory tendencies.

Author

• Masoud Movahed, University of Wisconsin-Madison