Comparative Study of the Long-term Trend of Structural Changes in Iran's Economy in Comparison with Newly-Industrialized Economies

Since structural change, along with traditional factors determining the growth such as labor force, capital and technology is known in theory and practice as one of the potential factors in growth due to providing the possibility of full and optimal utilization of resources, knowing the properties of structural changes in an economy can present a clear picture of possible economic growth. This is true especially when this knowledge is gained and used as a comparative criterion in comparison with indices of structural change in exemplary economies. This paper assesses the long-term trend of structural change in Iran’s economy determined by Hodrick-Prescot Filtering in comparison with corresponding variables in newly-industrialized countries. For this purpose, the status of structural variables in the period before the first rise in the oil price (years before 1973), the oil period (1973 to 1977), the revolution and war period (1978 to 1988), renovation period (1989 to 1998) and the period of implementation of the 3rd Development Plan (1999 to 2004) are analyzed. The results indicate that all structural variables in Iran’s economy had a trend similar to newly-industrialized countries in the period before the rise in oil price. However, the inappropriate changes occurred in the variables in the oil, revolution and war periods due to numerous economic and political shocks. Though some indices relatively improved in the periods of renovation and implementation of the 3rd Development Plan, the variables still remain in an unsuitable condition in comparison with their levels and trend in 1960’s and the first half of 1970’s and also in comparison with the trend of corresponding variables in newly-industrialized countries.