Structural Challenges to the Development of Iran's Digital Economy

Document Type : Research

Authors

Faculty of Economics and Political Science, Shahid Beheshti University (SBU), Tehran, Iran

Abstract

The digital economy, as one of the primary drivers of economic transformation, provides unique capacities for enhancing productivity, reducing transaction costs, creating added value, and reshaping market structures. Meanwhile, developing countries, particularly Iran, despite possessing human, technological, and demographic advantages, face multiple and complex obstacles in optimizing these capacities. The present study, drawing upon the theoretical framework of Neoliberal International Political Economy(IPE) and employing a quantitative method with a descriptive-analytical approach, comprehensively examines the structural, institutional, and policy challenges affecting the development of Iran's digital economy. Research findings indicate that the persistence of state-centric interventions, monopolistic structures, non-transparent policymaking, the absence of independent regulatory institutions, and international sanctions are the most significant deterrents to realizing fundamental neoliberal components, such as genuine privatization, deregulation, attracting foreign capital, and integration into global economic chains. The findings suggest that Iran's digital ecosystem, rather than following a targeted, policy-driven transformation model, has primarily experienced episodic growth in reaction to external crises and emergency conditions, including sanctions, the COVID-19 crisis, and inflationary pressures. Weaknesses in communication infrastructure, disruptions in data governance, limited access to emerging technologies, and an uncertain investment climate have led to reduced competitiveness of the digital ecosystem and human capital flight. In such a context, the private sector, owing to its structural dependency on state and quasi-state institutions, has also failed to play an effective role in the sustainable development of this domain. Accordingly, the research concludes that sustainable transformation in Iran's digital economy necessitates redefining the role of the state, reducing institutional stewardship, ensuring regulatory transparency, and strengthening and expanding international cooperation. Only through the acceptance of market economy logic and the implementation of neoliberal principles within an indigenized framework can Iran's digital economy be expected to move towards global competitiveness and inclusive growth.

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