Effects of Capital Accumulation Methods on Institutional Performance and Industrial Development: The Case of Textile Industry in Iran and Turkey

Capital accumulation is one of the first requirements of development. Capital accumulation methods play a crucial role in the governance and institutional structures. Globalization has a positive impact on the world production and employment. A large part of this effect can be seem in developing country، especially in textile، clothing and leather industries، whereas in many industrialized countries that were concentrated on high value added goods and services، production of such labour intensive activities is declined and a large amount of related jobs has been destroyed. However، all developing countries are not able to have an active presence in highly competitive global markets. During the past three decades، Turkey has increased her share in the world textile and clothing production and exports، while Iran has lost a large part of its production and employment in these sectors. This paper investigates the causes of great changes of competitiveness of textile industries in Turkey and Iran by an institutional approach; as competitive capability in textile industry has been affected by chain of structural causes during the time and passed trajectory of industrial development in these countries created different institutional capacity. Since mid 1970s، these countries implemented two different strategies that the outcome is observable in the textile industries'' performance. Dependence on oil revenues and distribution of oil rent prevented Iran from formation of competitive industries، whereas efforts for increased presence in international markets، particularly in textile and clothing، led Turkey to boost exports.