Development Planning, Industry, and the Path Ahead from a Political Economy Perspective: Lessons from Iran’s Lost Decade

Since the Islamic Revolution, Iran has implemented six development plans with varied approaches to industrial growth, including infrastructure expansion and targeted support. Despite adapting global models and allocating substantial resources, Iran’s industrial sector remains weak in competitiveness.A critical review shows the lack of a coherent theoretical framework and strategic orientation, leading to inconsistencies and failure to meet macroeconomic goals. Over the past two decades, industrial strategies have largely failed.This study examines Iran’s industrial sector during the Fifth and Sixth Development Plans in the 90s often called the “lost economic decade”—from a political economy perspective. Data reveal widespread deindustrialization due to the absence of a comprehensive strategy and its marginal role in policymaking.The study concludes that technology-driven production is the only viable path to reverse deindustrialization. Building technological capability is essential for global competitiveness. Successful countries show that sustainable industrial development requires efficient institutions, a transparent legal system, innovation-oriented policies, and incentives that support productive activities while limiting speculative behavior.