An Explanatory Pattern of the New Institutional Economics on the Influences of Oil Income on the Iranian Economy

One of the Structural feature of the Iranian economy and many Middle East countries, is reliance on oil revenues. The oil revenues have a lot of Economic and social impacts in these countries. The impact of oil revenues is divided into two categories, positive and negative consequences. This article focuses only on the negative effects of oil revenues. This consequences consist of a wide range of outcomes that is not possible to review them all in one article. This article examines three of the negative effects of oil revenues. This research was conducted within the theoretical framework of institutional economics. detailed analysis of information was done with a descriptive - analytic survey . Theoretical arguments is general, but the case study is the Iranian economy. Results show that : 1 - Three of the most negative effects of Iran's oil revenues are : destroying the balance of payments ($ 1 billion increase in oil and gas export revenues, increases imports $ 840 million directly) , the stagnation of the manufacturing sector and the productivity slowdown(Each percent increase in oil revenues reduces total factor productivity by 0.24 percent) . 2 - Some of the most important channels through which the oil revenues affect Iranian economic variables , including; providing extensive import and consumption without dependence on revenues from production, environmental degradation and lack of transparency in decision making and business through opaque choices and finally reduce the competitiveness of domestic production through increased demand and input prices of non- traded sectors.