Theoretical Framework

  • Farhad Gohardani
  • Zahra Tizro
Part of the Political Economy of Islam book series (PEoI)


The importance of institutions in the process of socio-economic development is being increasingly acknowledged in the literature on socio-economic development, liberalization, privatization, and the economics of emerging markets. Rodrik (2007), for instance, sees the market systems being embedded in five nonmarket institutions of property rights, regulations, macroeconomic stabilization, social insurance, and conflict resolution. The emergence of institutions is linked to the notion of social capital. With regard to the centrality of the notion of capital in development, the literature on development can be mapped on a conceptual space moving from natural capital, to physical and financial capital, human capital, and ultimately to social capital. The role of social capital and its main component, trust, is highlighted as the key prerequisite for the establishment of a stable institutional path towards sustainable socio-economic development (see Tilly 2005; Platteau and Peccoud 2010; Uslaner 2018, among others).

As a developing country, Iran has benefited from, for example, rich reservoirs of natural resources, strategic geographical positioning, almost uninterrupted stream of oil revenues, and reasonable amount of physical and human capital. Despite starting its leap for development with Japan in the second half of the nineteenth century, the gap in the level of development between the two countries could not be greater, largely due to constant socio-political instability (see Aisen and Veiga 2013) and intermittent episodes of small- and large-scale social upheavals experienced in Iran (Foran 1994; Azimi 2008).


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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Farhad Gohardani
    • 1
  • Zahra Tizro
    • 2
  1. 1.Independent EconomistYorkUK
  2. 2.University of East London (UEL)LondonUK

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