The Role of Foreign Investments in Iran's Industrial Development

Dr. Fereidoon Berkeshli

 The first movements for creating engine-driven industries in Iran began in the of Reza Shah. The income gained from selling of oil was at the hands of the government which saw no necessity for sharing its financial potentials with society and private section. During the second World War and military occupation of Iran by the allied forces, the Iran's economy encountered unprecedented shortages and inflations. Along with these changes in the course of partial development of private section, there were provided some facilities for procuring participation of foreign investments which were mainly regulated in the form of "procuring and supporting of foreign investments' rule". The activities of the main foreign companies practically began in Iran from 1957. On this year, the two American and French companies were established. America was the first country that arrived in direct investment in Iran after the second World War.

 The activities of the great American and Japanese companies remained at the top of the foreign companies in Iran until the end of Pahlavis' period. The study of the character of these investments shows that the investments of these companies, along with the industrial aims of the government, had been also in respect of providing internal production to meet the internal consumption and replacing the imports. Another main point is that the geographical form of procuring investments in Iran had been directly and obviously in the same direction with the geographical form of the country's imports. Establishment and development of the new industries in Iran, such as chemical and medical industries, vehicles and transportation facilities, has been mainly related to the foreign companies. The industrial model transferred by the foreign companies had some effects on the model and consumption manner of Iranian society which its negative aspects are being assessed more than its positive one. The results produced from the present study show that in developing countries such as the Islamic Republic of Iran they can enjoy the desired results of investment and foreign participating only by choosing a measured policy of development and at the same time restrict the evil effects resulting from the presence of foreign investments as less as possible.