Investigating the causal relationship between economic and political development in I.R. Iran (Case Study: Rafsanjani Presidency Period vs. Khatami Presidency Period)

The main purpose of this paper is to investigate the causal relationship between political and economic development in Iran in the two Rafsanjani and Khatami presidency period. To answer the main question of this article which is “what is the causal relationship between economic and political development during Rafsanjani and Khatami presidency period in Iran, two sets of hypotheses arouse as the causal relationship between economic and political development. 1: The causality from economic development to Political development and 2: The causality of political development to economic development. In this study, Granger causality test is used to evaluate the ratio of economic and political development indicators in Iran and the software used in this study is EVIEWS. The variables representing economic development include 9 variables of GDP growth, global competitiveness, foreign investment attraction potential, economic freedom, economic corruption, economic risk, financial risk, export and import diversification and industrial competition in the period under review and political development variables include: Politics, foreign disputes, government stability, internal disputes, corruption, increased democratic accountability, ethnic tensions, increased rule and law, military interference in politics, religious tensions and the quality of bureaucracy. The data belong to the PRS (Political Risk Service) group. The results obtained from the descriptive and statistical analysis indicate that in the period under review in Iran, economic development provided the basis for political development but political development was not the cause of economic development.