Human Resources in Iran: Potentials and Challenges

Critics of economic development strategies followed by most Middle Eastern countries often point to their lagging human development indicators as a sign of failure. While it is true that the growth performance of these countries has been generally quite poor since the 1980s—only Sub-Saharan Africa has had a worse experience—it is not true that they have failed to expand education. In fact, the rate of growth of years of schooling in the Middle East and North Africa (MENA) has been the fastest of any region in the last forty years.The difficulty for economic growth appears to lie in translating this rising education into rising productivity. Doing so is not just a matter of restoring growth, though that is an essential task, but to alleviate acute social pressures arising from youth unemployment fuelled by rapid population growth. For quite a while these employment problems were solved by accumulation of physical capital bought with oil. With that option no longer viable, solutions for human resource problems must be found elsewhere, particularly in the markets for labor and human capital.