Investigating the Impact of Globalization on Industrialization in Iran

The current research's main aim is to investigate globalization's impact on industrialization in Iran from 1979 to 2020 using vector autoregression model with time-varying parameters (TVP-VAR). The industrialization and economic globalization indexes have been used to achieve the research purpose. On the other hand, foreign direct investment, government size, and gross domestic product per capita have been used as control variables. This research illustrates that economic globalization has a very positive effect on industrialization in Iran. As a result, it is suggested to the policymakers to reduce international tensions between Iran and other countries to augment globalization, increase the import of new technologies and amplify industrialization. On the other hand, foreign direct investment has a very positive effect on industrialization in Iran. Moreover, GDP per capita has a positive but less intense effect on the industrialization index. Finally, the size of the government has a very negative impact on industrialization in Iran. As a result, policymakers are suggested to consider globalization as a critical and vital factor in increasing industrialization in Iran.