Pockets of Efficiency and the Rise of Iran Auto: Implications for Theories of the Developmental State

Most theories of the developmental state assume that industrial transformation requires capable and coherent development bureaucracies that are “autonomous”—insulated from particularistic private interests yet benefiting from networks connecting them to relevant private industrial actors. Scholars agree that political factionalism and Islamic institutions have transformed Iran into an economically incoherent and rent-seeking predatory state. Iran’s success in developing an automobile industry with high local manufacturing content, while becoming the world’s 11th largest producer of passenger cars and the fifth largest in the global south, seems to contradict this perspective. This paper offers two contributions to existing theories of the developmental state: First, it shows that nationalists with a project of industrialization can decouple a key set of organizations sufficiently from other parts of the state apparatus to create an effective “pocket of efficiency” within a specific industrial sector. Second, sequencing in the evolution of the state’s role may be important in facilitating effective development. Construction of Iran’s auto industry resulted from a process of collective action by elite managers within the industry to first establish elite autonomous alliances within the state and then to establish network connections to economic actors outside the state who could help defend the project from opponents.