The Economic Cost of the Islamic Revolution and War for Iran with Mohammad Reza Farzanegan

Stanford Iranian Studies Program

May 20, 2021 This study estimates the joint effect of a new political regime and war against Iraq, on Iran’s per capita Gross Domestic Product (‘GDP,’ constant 2010 US$) for the period 1978–1988, during the revolution/war. Professor Mohammad Reza Farzanegan uses a synthetic control approach, whereby a synthetic Iran is constructed as a weighted average of other Middle East and North Africa (‘MENA’)/Organization of the Petroleum Exporting (‘OPEC’) countries to match the average level of some key per capita GDP correlates over the period 1970–1977 as well as the evolution of the actual Iranian per capita GDP during that period. He finds a sizable negative effect of the joint treatment. The average Iranian lost an accumulated sum of approximately US $34,660 during 1978–1988 (i.e. the average annual real per capita income loss of US $3,150). This loss equals 40% of the real income per capita, which an Iranian could earn in the absence of revolution and war. Mohammad Reza Farzanegan is a Professor in Economics of the Middle East (since 2012) at the Center for Near and Middle Eastern Studies (CNMS) & School of Business and Economics of Philipps-Universität Marburg in Germany. He is the coordinating professor for the international master study program of Economics of the Middle East in Marburg. He is an ERF Research Fellow, and CESifo Research Network Fellow. His main areas of research are political economy, development economics, energy economics, and empirical institutional economics. His research has been published in edited volumes and international journals. He gained his PhD in Economics from the Technische Universität Dresden with the research grant of DAAD (2006-2009). He received the Georg Forster Research Fellowship for postdoctoral researchers from Alexander von Humboldt Foundation for his project at ZEW Mannheim & TU Dresden (2010-2012). He obtained his MSc degree in Energy Economics & Marketing from University of Tehran (2000-2003) and his BA in Theoretical Economics from Allameh Tabatabaei University in Tehran (1995-1999).