The Role of Production-Based Institutions in Creating Resilience

This paper investigates the effect of institutions on resilience within the framework of the new institutional school, through applying a descriptive-analytical approach. The result of the study shows that ignoring the establishment of efficient, flexible and production–oriented institutions makes countries vulnerable to risks, shocks and uncertainties. Based on this, one of the common innovations for reducing uncertainties and dealing with shocks is principly institutionalization. Effectiveness of institutions on production determines how countries are exposed to shocks. The global experience shows that countries with export-oriented manufacturing sectors in which institutions encourage production especially in industry are more responsive to shocks. On the contrary, in countries with inefficient institutions and weak production capacity, exposure to shocks becomes a crisis. Investigating the institutional framework and the way of exposure to oil shocks and sanctions in iran confirms that in the absence of production-oriented institutions and with the lack of learning from the past, the Iranian governments have always shown spontaneous reactions which has deteriorated the situation causing the greatest damage to the country’s manufacturing sector due to short-sighted policies.