Analysis of the Failure of Iran’s Economic Development Process in the Transition from Natural State During 1941-1979

The institutional economists’ view of transition from the Natural State is one of the common theoretical models pointing to the perception of the historical origins of the underdevelopment in different societies. The societies should pass some bottlenecks in order to transition from the natural state (namely coalition or conflict, organization with personal or impersonal relations, and the distribution of productive or unproductive rent) and pass through the Limited Access Order ranges from Fragile limited Access Order to Mature Limited Access order toward Open Access Order conditions. The present paper tries to analyze the institutional barriers of economic development in the framework of Douglas North's views of the natural state during the 1941-1979. The performance of the ruling coalition members are analyzed in each bottleneck of transition from the Natural State. The present research results indicate that the conflict over the power and the exerting of violence from those groups external to the ruling coalition under the shadow of interference by the foreign factors have led to the decentralization of the state power in this period Under such circumstances, the uncertainty atmosphere overshadowed the political and economic market so that the political and economic superordinates consider short-term targets. The unproductive rent distribution was therefore formed under the shadow of personal relations so the extractive institutions were produced and disseminated for supporting benefit's to a certain group in Iran. This has led to Iran moving toward vicious cycles instead of transitioning from Limited Access Order and moving toward the evolutionary cycles.