State Capacity and Industrial Development: A Comparative Study of Iran and Egypt (1990–2010)

Despite pursuing industrial development to solve various socioeconomic and sociopolitical issues, such as the urgent need to reconstruct war damages in Iran, the foreign debt crisis in Egypt, and population growth in both countries, statistical data show only slight progress. The graphs of the gross domestic product (GDP) growth and exports of goods and services as a percentage of GDP, which are reliable indexes for measuring industrial output, along with the rate of foreign direct investment, demonstrate numerous fluctuations and instability in the economic growth rate for both cases under the period under review. Failing to diversify the economy, Iran and Egypt still relied heavily on unproductive rents, mostly from hydrocarbon exports, at the end of this era. Why is this the case despite the national leadership putting industrial development on the agenda? This article addresses this question by examining state capacity, focusing on the internal cohesion of state authority and its relation to society. In so doing, comparative historical analysis and causal narrative method are used.