Social Order, Rents and Ecnomic Development in Iran since the Early 20th Century

Hadi Esfahani () and Esra Gürakar
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Hadi Esfahani: University of Illinois at Urbana-Champaign

No 850, Working Papers from Economic Research Forum

Abstract: This paper examines the evolution of social orders in Iran since the early 20th century and relates the country’s economic performance to that process. The study is enriched by comparisons with Turkey. We base our analysis on the social orders framework developed by North, Wallis, and Weingast (2009). We argue that the system in Iran has been a basic limited access order, where the settlements among the elite have been dominated by individuals and groups that have been more effective in organizing and controlling the means of violence. While many aspects of the system and the dominant groups have changed in significant ways over time, the transitions have not yet supported the development of impersonal rules and independent private organizations. This has been in contrast with the situation in Turkey where the army’s collective rule and the role played by the European Union has allowed impersonal rules and long-lived private organizations to grow and gain strength. Such gains could be reversible. Nevertheless, they are necessary to preparing a country to transit to more open access orders. The implications of the analysis offer insights for the Arab countries that are going through political transformation in the aftermath of the Arab Uprisings. Awareness about the nature of the long-term effects of the decisions made by the political actors at this time is likely to matter a great deal for the social outcome.

Pages: 40
Date: 2014-10, Revised 2014-10
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