Gender and Industrial Policy: Considerations for Iran

The Iranian economy has underperformed for decades due to a combination of distortionary economic policies, mismanagement, and periods of crippling international sanctions. The Sixth Five-Year Economic, Social, and Cultural Plan (2016–2021) aims to correct some of the past mistakes and tackle deep-rooted challenges across the public and private sectors to generate an average 8% GDP growth per annum that can create much-needed jobs and narrow the widening income inequality. Achieving these targets, or even more modest ones, requires significant and broad-based structural and institutional reforms that can be summed up as a new industrial policy. Recent cross-country empirical evidence demonstrates that tinkering with fiscal, monetary, or trade policies is not sufficient. The emerging literature suggests that realizing also women’s economic potential and capitalizing on the female talent pool can be a powerful policy lever to augment and generate growth, diversify the economy, and build a resilient middle class. This chapter argues that concurrent with structural reforms, Iran must address gender inequalities and barriers to women’s economic activities. Iran has one of the lowest female labor force participation rates in the world due to significant legal and social impediments and despite impressive female educational achievements. The chapter concludes that without addressing this oft-overlooked policy domain to remove gender-based barriers, Iran is unlikely to achieve its Five-Year Plan growth and income distribution targets.