The Development of Role of State in Industrialization: Comparative-historical Analysis of Iran and Malaysia

This paper has investigated the role of state intervention in industrial development of Iran and Malaysia. There is a little time difference between Islamic Revolution of Iran and the independence of Malaysia, but the level of industrial development between them are very different. This paper explains differences based on state capabilities and the path of evolution of these capabilities and shows the effect of institutional legacy on policy capacity, implementation capacity and state capacity. Oil in Iran and the effect of colonization on Malaysia have had crucial effects on state capabilities. Comparative-historical analysis with institutional approach, using historical narrative and through applying path-dependency analysis has been used to collect and analyzing data. The main focus of the article is on developments in 1980 decade, but all period of attempting for industrialization in both countries has been observed. This period in Malaysia starts with independence in 1958, and in Iran backs to 1940s. This paper emphasizes on mechanisms of successful intervention of state in industrialization and their interaction with quality of government and social contexts.