An Analysis of Iranian Government Proceedings to Setup Economic Institutions During 1940s-1970s

Among the widespread views on the role of government in economy, an intermediate view introduces the most important priority for government as creation of institutional infrastructures. According to this view, the government has to create necessary institutional framework to facilitate markets and private sectors’ operations. This important role is more vital for developing countries especially oil-dependent ones. A century ago, many obstacles against growth were visible in Iran. Among them, the most important ones were the lack of suitable institutional frameworks for market economy to operate efficiently. This paper is to investigate proceedings of Iranian government to establish institutional infrastructures during four decades since 1940.
This paper has a combined approach of historical and empirical analysis to identify the main proceedings of Iranian government to set up Economic Institutions during near four decades between 1940 and 1978.These years were concurrent to the beginning of economic development process at national levels.
Findings: Investigations show that after unsuccessful, interrupted and sporadic efforts of statesmen during the 19th century and first quarter of 20th century, during the second quarter of 20th century, government volition formed to reconstruct and establish modern institutions and to spread them into national sphere. During the next three decades, the government focused on establishing new economic institutions. Among them, six proceedings are the most important: (i), Establishment of Plan Organization, (ii), Nationalization of oil industry, (iii), Land Reform, (iv), Establishment of Revaluation Loan Fund and Specialized Banks, (v), Establishment of the Tehran Stock Exchange and the Central Bank of Iran and finally, (vi), Implementing five long-run development and economic construction plans (including two 7 year plans and three 5 year plans).
Value: This paper is to show the most important economic institutions established by the Iranian government at the mentioned period. This article showed that the government of Iran at the mentioned period proceeded to the establishment of important economic institutions each of which had their own sizable impact on Iran's economy. The main feature of these institutions is that, there were many arguments for and against them. It seems that among these institutions, land reform, nationalization of oil industry, establishment of Plan Organization and five long-run development and economic construction plans have got the most arguments for and against, respectively. Even today, many years after the birth of these institutions (although some of them have been transmuted), those arguments are continued. This paper's originality is to show the most important economic institutions established by the Iranian government at the mentioned period.