Tahqiqāt-e Târix-e Eqtesâdi (Economic History Studies of Iran)

An Explanation of Unsustainable Industrial Development in the Reza Shah Era Based on Embedded Autonomy Theory

Articles in Press

Document Type : .

Authors

ghasem khorami 1
ghasem khorami 2

1 Institute For Trade Studies and Research

2 Industrial Management Institute

10.30465/ehs.2026.54228.2089
Abstract
While Iran’s industrial development took off during the first Pahlavi era, the momentum didn’t last. By the end of Reza Shah’s reign, growth was already stalling, and the 1941 occupation effectively paralyzed it for the next twenty years. This article explores the political economy behind this instability, specifically asking why the growth seen between 1925 and 1941 was so fragile. Drawing on Peter Evans’s concept of ‘embedded autonomy,’ we argue that for industrialization to actually stick, it must be a shared project between the state and society. While Reza Shah successfully used the military and a modern bureaucracy to insulate the state from outside pressure, he failed to build any real institutional bridges with the country’s productive forces. The evidence shows that state monopolies—like the 1930 Foreign Trade Monopoly Law—and massive military spending fractured the very coalition needed for development. Instead of investing in industry, merchants pivoted to land speculation, while the intellectuals who might have driven reform were sidelined as mere technocrats. Ultimately, this didn’t create a self-sustaining industrial class; it created a state-dependent capitalism with weak social roots. When the central authority collapsed in September 1941,

Keywords

development
Industrialization
Social forces
industrial bourgeoisie
Reza Shah
Subjects
Tahqiqāt-e Târix-e Eqtesâdi (Economic History Studies of Iran)

Articles in Press, Accepted Manuscript
Available Online from 19 July 2026

  • Receive Date 19 February 2026
  • Revise Date 28 June 2026
  • Accept Date 15 July 2026

Home

Guide for Authors

Submit Manuscript

Reviewers

Contact Us