Veiled Employment: Islamism and the Political Economy of Women’s Employment in Iran

By Roksana Bahramitash

The popularity of neoliberal economic policies is based, in part, on the argument that the liberalization of markets promotes growth and increases employment opportunities for women. Although the latest research bears this out, it also presents a grim portrait of the state of women’s employment. Approximately 70 percent of those living on less than a dollar a day are women or girls.

In Veiled Employment, the contributors examine these stark disparities, focusing on the evolving role of women’s employment in Iran. Based on empirical field research in Iran, their essays document the accelerating trend in the size and diversity of women’s employment since the 1990s and explore the impact of various governmental policies on women. The volume analyzes such issues as the effect of global trade on female employment, women’s contributions to the informal work sector, and Iranian female migrant workers in the United States. Rejecting the commonly held view that centers on Islam as the primary cause of women’s status in the Muslim world, the authors emphasize the role of national and international political economies. Drawing on postcolonial feminist theory, they reveal the ways in which women in Iran have resisted and challenged Islamism, revealing them as agents of social transformation rather than as victims of religious fundamentalism.

• Language: English
• Publisher: Syracuse University Press
• Release date: Apr 15, 2011
• ISBN: 9780815651192

Book preview

Veiled Employment

Contemporary Issues in the Middle East

OTHER TITLES FROM CONTEMPORARY ISSUES IN THE MIDDLE EAST

Citizenship and the State in the Middle East: Approaches and Applications

NILS A. BUTENSCHON, URI DAVIS, and MANUEL HASSASSIAN, eds.

Gender and Citizenship in the Middle East

SUAD JOSEPH, ed.

In the Eye of the Storm: Women in Post-Revolutionary Iran

MAHNAZ A FKHAMI AND ERIKA FRIEDL, eds.

Iranian Cities: Formation and Development

MASOUD KHEIRABADI

Islam, Arabs, and the Intelligent World of the Jinn

AMIRA EL-ZEIN

Labor Unions and Autocracy in Iran

HABIB LADJEVARDI

The Second Message of Islam

MAHMOUD MOHAMED TAHA; ABDULLAHI AHMED AN-NA’IM, trans.

Twenty Years of Islamic Revolution: Political and Social Transition in Iran since 1979

ERIC HOOGLUND, ed.

Women in Muslim Family Law, 2nd ed.

JOHN L. ESPOSITO, With NATANA J. DELONG-BAS

Women, the Family, and Divorce Laws in Islamic History

AMIRA EL AZHARY SONBOL, ed.

Veiled

Employment

ISLAMISM AND THE POLITICAL ECONOMY OF WOMEN’S EMPLOYMENT IN IRAN

Edited by

ROKSANA BAHRAMITASH & HADI SALEHI ESFAHANI

SYRACUSE UNIVERSITY PRESS

Copyright © 2011 by Syracuse University Press

Syracuse, New York 13244-5290

All Rights Reserved

First Edition 2011

11  12  13  14  15  166  5  4  3  2  1

∞ The paper used in this publication meets the minimum requirements of the American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI Z39.48-1992.

For a listing of books published and distributed by Syracuse University Press, visit our Web site at SyracuseUniversityPress.syr.edu.

ISBN: 978-0-8156-3213-9

Library of Congress Cataloging-in-Publication Data

Veiled employment : Islamism and the political economy of women’s employment in Iran / edited by Roksana Bahramitash and Hadi Salehi Esfahani. — 1st ed.

p. cm. — (Contemporary issues in the Middle East)

Includes bibliographical references and index.

ISBN 978-0-8156-3213-9 (cloth : alk. paper)

1. Women—Employment—Iran—History. 2. Women—Employment—Iran—Political aspects. 3. Sexual division of labor—Iran. I. Bahramitash, Roksana, 1956– II. Esfahani, Hadi Salehi.

HD6182.56.V45 2011

Manufactured in the United States of America

Contents

List of Figures

List of Tables

Acknowledgments

Contributors

Acronyms and Abbreviations

Introduction

ROKSANA BAHRAMITASH and HADI SALEHI ESFAHANI

1. Gender and Globalization

The Iranian Experience

JENNIFER C. OLMSTED

2. Modernization, Revolution, and Islamism

Political Economy of Women’s Employment

ROKSANA BAHRAMITASH and HADI SALEHI ESFAHANI

3. From Postrevolution to the Reform

Gender Politics and Employment

ROKSANA BAHRAMITASH and HADI SALEHI ESFAHANI

4. The Transformation of the Female Labor Market

ROKSANA BAHRAMITASH and HADI SALEHI ESFAHANI

5. The Effects of International Trade on Gender Inequality in Iran

The Case of Women Carpet Weavers

ZAHRA KARIMI

6. Female-Headed Households in Iran

Microcredit versus Charity

ROKSANA BAHRAMITASH

7. Veiled Economy

Gender and the Informal Sector

ROKSANA BAHRAMITASH and SHAHLA KAZEMIPOUR

8. Iran’s Missing Working Women

FATEMEH ETEMAD MOGHADAM

9. Iranian Immigrant Women’s Labor Market Strategies

A Complex and Entangled Process

ZOHREH MIRZADEGAN NIKNIA

References

Index

Figures

2.1.Income Distribution in Iran

3.1.Iran’s Economic Growth in Comparative Perspective

3.2.Sectoral Shares in Iran’s Non-Oil Value-Added Production

3.3.Age Pyramid of Iran’s Population, 2006

4.1.Share of Women in Labor Force

4.2.Share of Women in Employment

4.3.Value of Iran’s Carpet Exports in Constant 1983 US Dollars

4.4.Employment Shares of Main Economic Sectors in Urban Areas

4.5.Employment Shares of Main Economic Sectors in Rural Areas

4.6.Share of Women Age 10–19 in Female Employment and Population

4.7.Share of Women Age 10–19 in Economy-Wide and Manufacturing Female Employment

4.8.Age Pattern of Female Labor Force Participation in Urban Areas During Census Years 1956–2006

4.9.Age Pattern of Female Labor Force Participation in Rural Areas During Census Years 1956–2006

4.10.Age Pattern of Female Employment and Labor Force Participation Rate in Urban Areas, 1976–1986

4.11.Age Pattern of Female Employment and Labor Force Participation Rate in Rural Areas, 1976–1986

4.12.Share of Students in Female Population, Ten Years and Older

Tables

1.1.Female Labor Force Participation, Female Literacy, and Total Fertility Rate for MENA Countries

1.2.Distribution of Female Employment by Sector for MENA Countries

3.1.Urbanization and the Share of Women in Rural and Urban Areas

3.2.Literacy Rate

3.3.Enrollment Rates

3.4.Average Age at First Marriage

3.5.Percentage of Single Women Age 15–24

3.6.Life Expectancy at Birth

3.7.Fertility Rate

4.1.Female Labor Force, 1956–2006

4.2.Sectoral Composition of Female Employment

4.3.Literacy Rate

4.4.Iranian Women’s Educational Attainment and Employment

4.5.Education and Labor Force Participation, 1976 and 2006

4.6.Share of Public Sector in Total Female Employment

4.7.Education and Share of Women in Private and Public Employment, 1996 and 2006

4.8.Distribution of Female Employment Across Private Sector Positions

4.9.Education and Share of Women in Private Sector Positions, 2006

4.10.Distribution of Female Employment by Occupational Categories

4.11.Education and Occupational Structure of Female Employment, 1976 and 2006

4.12.Unemployment Rates in Urban and Rural Areas, 1956–2006

4.13.Education and Unemployment, 1976 and 2006

4.14.Age and Female Unemployment Rate, 1976 and 2006

4.15.Field of Study and Unemployment among Population with Higher Education, 2006

5.1.Persian Carpet Exports

5.2.Production, Employment, and Exports in Handwoven Carpet Industry in Major Exporting Countries, 2000–2005

5.3.Employment in Iran’s Textile Industry

5.4.Employment in Iran’s Textile Industry by Working Position

5.5.Distribution of Carpet Weavers by Location and Nationality

5.6.Distribution of Sample Carpet Weavers by Sex and Nationality

5.7.Distribution of Sample Carpet Weavers by Age, Sex, and Nationality

5.8.Distribution of Sample Carpet Weavers by Education Level

5.9.Number of Carpet Weavers in Households by Nationality

5.10.Distribution of Sample Carpet Weavers by Kind of Production

5.11.Share of Carpet Weaving in Household Income

6.1.Share of Women among Heads of Households by Activity Status

6.2.Composition of Women Heads of Households

7.1.Household Income and Employment Status

7.2.Housing and Employment Status

7.3.Work Satisfaction and Income Background among Those in Informal Sector

7.4.Education and Employment Status

7.5.Reasons for Entering the Informal Economy

7.6.Women’s Marital and Employment Status

7.7.Informal Jobs and Sources of Initial Necessary Capital

7.8.Women’s Employment Status and Decision-Making Powers over Basic Household Expenditures

7.9.Income Expenditure and Informal Employment

8.1.Composition of Economically Active Population (Ten Years and Older)

8.2.Labor Market Participation and Education of Female Population (Ten Years and Older)

8.3.Marital Status of Women in Survey Sample

8.4.Education Attainments of Women in Survey Sample

8.5.Time Spent on Work by Women in Survey Sample

8.6.Public versus Private Employment of Women in Survey Sample

8.7.Reasons for Working of Women in Survey Sample

8.8.Responses in Official Surveys versus Informal Survey

8.9.Reasons for Not Declaring Employment in Official Surveys

8.10.Income Levels of Employed Women in Survey Sample

8.11.Share of Women Who Work from Home

8.12.Marketing Methods of Women Who Work from Home

8.13.Obstacles to Advancement of Career/Business

9.1.Labor Market Status of Participants, January 2001

9.2.Occupation of Participants, by Type

9.3.Occupation of Spouses, by Type

9.4.Dollar Income of Participants and Spouses

Acknowledgments

THIS PROJECT STARTED in 2004, when I (Bahramitash) went back to Iran after thirteen years. The trip was a shocking experience as I found myself extremely uninformed about changes that had occurred during my absence. I had lived in Iran all my life, as a student in the early 1980s and then as a teacher at university in the late 1980s until my departure to Canada in 1991. Iran had undergone a great deal of transformation and appeared as an extremely dynamic country. As someone whose research area has been poverty in general and women in particular, I had been engaged in fieldwork in Southeast Asia. Comparing the literature on Southeast Asia with that on the Middle East in general and on Iran in particular, I realized that a great deal of what happens in Iran has remained unnoticed. This lack of attention may be partly because many scholars who write are either unable to travel to Iran or do not stay an extended period of time, and not many Iran-based scholars publish their work in English. I became convinced that it was extremely important to carry out fieldwork in order to reflect some of the changes that had occurred in the postrevolutionary era, particularly changes of the reform era.

I first attempted to approach Iranian scholars and read their work. Next, I went through library archives, conducted interviews, attended conferences (and there were many conferences being held throughout the country), and traveled extensively. I found a major gap between the literature in English and what has happened in Iran, particularly with regard to women’s work.

While working on this project I delivered a lecture at the University of Illinois at Urbana-Champaign, where I met Hadi Salehi Esfahani. We exchanged notes, shared our research, and decided to work together. We approached other academics who have worked in Iran, and Fatemeh Moghadam and Zahra Karimi joined us. For a comparative study, we asked Jennifer Olmsted. Here we should mention that Zohreh Niknia was from the start of the project very supportive and involved, for which we are very thankful.

Another person very important to this project is Eric Hooglund. Hooglund has been an extremely influential scholar. He from time to time read drafts of several of these chapters and has been one of the strongest critics of the work but, at the same time, he has been one of my greatest sources of information and inspiration.

Other scholars helped this project in various capacities, and we wish to thank specific Iranian scholars such as Azam Ravad Rad, Maryam Afshary, Fazileh Khani, Nahid Motiei, Susan Bastani, Mohseni Tabrizi, Sam Aram, Nahid Farast, Hossien Nouri, and Maryam Norouzi. They shared their research with us, and we would have liked to have been able to include their work in this book, but we were unable to incorporate them in this particular volume. I (Bahramitash) wish to thank them all and hope to incorporate their work in a different anthology.

Here in Canada and the United States, the book has benefited from the support of a number of scholars. Lillian Robinson, the principal of the Simone de Beauvoir Institute, Concordia University Women’s Study Program’s intellectual and institutional support, was pivotal during the early stages of the book. She was a true scholar as well as a dear friend who was a great resource person.

The book has benefited from the support of Dr. Patrice Brodeur, the chair of Islam, Pluralism, and Globalization at the University of Montreal, whose expertise has been vital and highly critical. Dr. Haleh Esfandiari, director of the Middle East Program at Woodrow Wilson Center for International Scholars, has provided essential scholarly reinforcement for this book. Also many thanks to Nadereh Chamlou and the Persinate Gender Network for bringing together academics who work on issues related to gender and work in Iran.

There have been other scholars whose help has been crucial. We wish to thank Parvin Alizadeh and Fatemeh Moghadam, who read and commented on our work. We wish to thank Jennifer Olmsted for writing a chapter at such short notice as well as for reading and providing excellent comments. Other academics have supported this project by reading parts of the work and providing constructive criticism, among them Elaheh Rostami Povey, Minoo Moallem, and Valentine Moghadam. Others have been important for the exchange of ideas, and here we want to thank in particular Nayereh Tohidi, Lynda Clark, Fred Reed, Anthony Synnott, and Greta Naumeroff, along with other scholars from the Simone de Beauvoir Institute, the McGill Center for Developing Area Studies, and the University of Montreal.

Thanks to the UN Development Program in Tehran and Dr. Ali Farzin, Mr. Hamidi, and Dr. Parvine Marofi. There have been other organizations such as Hamyaran, where Bahramitash received help from Dr. Reza Sheikh and Sorrayah Bahmanpour, who provided links and information. Tehran University Department of Sociology, from which Bahramitash graduated several years ago was important to some of the data gathering and here we wish to thank Dr. Mirzai, who was my professor back in the late 1980s. Thanks also to Dr. Azkia and Dr. Tavasoli. Last but not least, Shahla Kazemipour has been extremely supportive and has provided the project with her expertise most generously.

On a different note, we would like to extend special thanks to our friends in Iran. For Bahramitash, these are Roshanak Malik, Mitra Pourtorab, Fatima Shobeyri, and Farkhondeh Aghani, supportive women and high school friends who have made her stay in Tehran joyful and exhilarating. Esfahani is indebted to his former colleagues at Tehran University, especially Ali Farsi, Mohammad Ghafourian, and Fariba Riazi. In North America we want to thank all our friends who have made the solitary work of writing less burdensome. Among them Bahramitash is specially grateful to Mahshi Payro, Yasmin Noori, Farzaneh Khadir, Parvin Saghafi, Amir and Arezo Khadir, Rachad Antonious, and Pari Esfandiari. Esfahani’s special thanks go to Sima Alikani, Firouz Gahvari, Esmail Meisami, and Hassan Vafai.

Our family members have been great sources of inspiration and support. Esfahani would like to express appreciation to his father, Hossein Salehi-Esfahani, and to his mother, Aghdas Hakim-Elahi, who introduced him at an early age to women’s predicament in Iran and set brave examples of what could be done by her own dedicated social activism. He is also thankful to his wife, Niloofar Shambayati, and children, Kumars and Katayun, who are always witty and insightful. Furthermore, he is grateful to his siblings, especially Djavad and Haideh for sharing ideas, data, and research results. Bahramitash wishes to thank her mother, Fatimeh Samadi Haghighi, her uncle Behzad Farrahi, and other family members, Zohreh Baharmast and her wonderful children, Marzieh, Reza, and Hanieh. She also wishes to express her gratitude toward her wonderful children, Mahsana, Arash, Iman, and Atena Sadegh, who remain the single most important social capital of her life. With them around, Bahramitash feels herself connected to the real world where millions of women do what she does: raise their children while working, often with little access to economic resources. Having to deal with the job of raising four children as an immigrant mother, she is not just a researcher on women and work but a participant observer.

Contributors

ROKSANA BAHRAMITASH is a graduate of the McGill University Sociology Department and has received two postdoctoral awards from the Social Sciences and Humanities Council of Canada (SSHRC). She is the winner of the Eileen D. Ross award (2003–4) for her work on female poverty, globalization, Islamization, and women’s employment. In 2006 she won a three-year research grant from the SSHRC and in 2008 she was given a grant by the Council for the Arts to write her memoir. Dr. Bahramitash has taught many courses at McGill University and Concordia University and has worked with international development agencies including the Canadian Development Agency (CIDA), the International Development Research Centre (IDRC), the United Nations Development Program (UNDP), and the World Bank–funded project through the Center for Teaching and Research on Arab Women (CAWTAR). Bahramitash is the author of several articles and book chapters. Her first book is Liberation from Liberalization: Gender and Globalization in Southeast Asia (2005, reprinted 2008). This book has been translated into Persian by Mr. Hossien Nouri and published by Samt in Tehran. A forthcoming book is entitled Gendering in Contemporary Iran: Pushing the Boundaries (coedited with Eric Hooglund). Bahramitash is research director at the Chair of Islam, Pluralism, and Globalization at the University of Montreal.

HADI SALEHI ESFAHANI is professor of economics and director of the Center for South Asian and Middle Eastern Studies at the University of Illinois at Urbana-Champaign. In addition, he currently serves as the editor in chief of the Quarterly Review of Economics and Finance. He has also served as president of the Middle East Economic Association during 2007–9 and has worked for the World Bank as a visiting staff economist and a consultant. He received his BSc in engineering from Tehran University and a PhD in economics from the University of California at Berkeley. His theoretical and empirical research is in the field of the political economy of development, focusing in particular on the Middle East and North Africa region. Dr. Esfahani has published numerous articles on the role of politics and governance in fiscal, trade, and regulatory policy formation. His articles have appeared in The Economic Journal, Review of Economics and Statistics, Journal of Development Economics, International Economic Review, Oxford Economic Review, World Development, International Journal of Middle Eastern Studies, and Iranian Studies, among others.

SHAHLA KAZEMIPOUR is associate professor of demography and deputy director of the Population Studies and Research Centre in Asia and the Pacific. She has done extensive research on development and population. She has worked with a number of professional associations, for example as supervisor of the Demographical Research Section at the Institute of Social Studies and Research, and as head of the advisory board for student affairs at the faculty of social sciences at Tehran University. Dr. Kazemipour is the author of many books and articles in refereed international journals in both English and Persian, including Primary Methods in Population Analysis (1991), A Sociological Study of the City of Tehran (2001), Myth and Realities of the Impact of Islam on Women: Women’s Changing Marital Status in Iran (with Roksana Bahramitash, 2006), and Economy, Informal Economy in Today: An Encyclopedia of Life in the Islamic Republic (with Roksana Bahramitash, 2008).

FATEMEH ETEMAD MOGHADAM is a professor of economics at Hofstra University. She received her D.Phil. in economics from Oxford University, and her MA and BA from Columbia University (Barnard College). She has published extensively on agricultural economy, economic history, and women and development in Iran. She is the author of From Land Reform to The Revolution: The Political Economy of Agricultural Development in Iran (1960–1979). Her publications on gender and development in Iran include: Iran’s New Islamic Home Economics: An Exploratory Attempt to Conceptualize Women’s Work in the Islamic Republic (2001); Women and the Labor in the Islamic Republic of Iran, in Women in Iran from 1800 to the Islamic Republic (2004); and Undercounting Women’s Work in Iran (2008). Dr. Moghadam served as executive secretary and president of the Middle East Economic Association. She has also served as board member of a number of scholarly organizations, as well as on editorial boards of scholarly journals. She has worked as a consultant for UNDP and the World Bank.

ZAHRA KARIMI received her PhD in economics from an Iranian state university and is currently an academic staff member and member of the Women’s Studies Center at the University of Mazandaran. Her field of research is the labor market in Iran, focusing in recent years on the employment of Iranian women. Dr. Moughari’s other fields of interest include heterodox economics and institutional economics.

ZOHREH MIRZADEGAN NIKNIA is a visiting professor at the Department of Economics, Mills College. Her research interests are gender and migration, economic development, and political economy of oil. She has been a visiting scholar at the Department of Gender and Women Studies, University of California, Berkeley (2003–6) and the Women’s Leadership Institute at Mills College (2004–5). Dr. Niknia has taught at the University of California, Berkeley, Extension Program; California State University, Sacramento; and the University of Missouri, Kansas City. She is the recipient of the Outstanding Dissertation Award, University of Missouri–Kansas City; the Association of Collegiate Business Schools and Programs Teaching Excellence Award; the National Institute for Staff and Organizational Development Excellence Award; a Fulbright-Hays Fellowship, East-Central Europe Summer Research Project; and a Faculty Exchange Program Award, Russia.

JENNIFER C. OLMSTED, who grew up in Lebanon and spent a number of years in the Palestinian Territories, has long been interested in globalization, Middle East economies, and the ways conflict shapes economic outcomes. A graduate of Georgetown University and the University of California, Davis, much of her research focuses on socioeconomic conditions facing women in the Middle East. Her current work examines the way conflict and economic isolation affect economic conditions and gender norms, often in contradictory ways, using Iran, Iraq, and Palestine as case studies. Her publications have appeared in various journals, including World Development, Industrial Relations, The Journal of Development Studies, Feminist Economics, and The Journal of Middle East Women’s Studies, as well as numerous book volumes. Dr. Olmsted is currently associate professor and chair in the Department of Economics at Drew University, Madison, New Jersey. She has also worked for various other universities as well as the US Department of Agriculture, and consulted for numerous research organizations, including the Social Science Research Council (SSRC), RAND, the World Bank, the UNDP, and the International Food Policy Research Institute (IFPRI).

Acronyms and Abbreviations

Veiled Employment

Introduction

ROKSANA BAHRAMITASH and HADI SALEHI ESFAHANI

IN THE WINTER OF 2004 Roksana Bahramitash attended a nationwide conference in Tehran where workers, employers and entrepreneurs, and government officials came together to address issues such as wages and unemployment. The conference was heavily influenced by the International Labor Organization’s (ILO’s) commitment to the concept of Decent Work. Following the conference an ILO representative gave a lecture at the Ministry of Work and Social Welfare. After the lecture, Bahramitash and a former colleague who was then working with the ILO drove to another seminar. On the way, a discussion about the issue of female employment in Iran started during which Bahramitash and the ILO representative (a native Iranian) shared their frustration over Western conceptions of Iranian women’s international image. The discussion revolved around the difference between outsiders’ images of Iran and the reality of the country, a point of sympathy between her and the ILO representative who, like her, traveled to Iran on a regular basis and was up-to-date about the changes taking place over the past few decades. Like so many visitors, he admitted that the Western media’s portrayal of Iran paints a dark picture of women in the country. For many Westerners the differences between Iran and Iraq or even Saudi Arabia are minor details, irrelevant to how they view the country in question. For the most part Iran is portrayed as a hotbed of radical Islam, a place of misogyny and retrograde views that belong to the Middle Ages. While it is true that the position of women—particularly middle-class women—has suffered as a result of the Islamization process that occurred after the Iranian revolution, the situation of Iranian women is far more nuanced and complex than is often assumed outside of the region.

Development/Modernization

Development studies emerged as a distinct area of research in the aftermath of World War II. The sociological basis of this new field was modernization theory, inspired by structural functionalism and the work of the prominent sociologist of the postwar era Talcott Parsons. Development/modernization prescribed social transformation of previously colonized and semicolonized countries (which were now called the Third World) from traditional to modern. This transformation has been viewed primarily as unidirectional and evolutionary, operating through a market economy. In the case of the mainstream academia in Western countries generally and the United States in particular, and during the Cold War, development studies and modernization theory were preoccupied with the growing popularity of Socialist ideas.

During the same time, in the Soviet Union and the Eastern Bloc, modernization had already been fully embraced, and the only difference was that this policy was carried out by the ruling Communist Party and through heavy-handed government programs. These programs, in some cases harsh, did accelerate industrialization and economic growth in the Soviet Union for a while, especially during the 1930s when the Western world was suffering from the Great Depression. The initial economic success of the Soviet programs added to the political appeal of socialism in the Third World and became a threat to the hegemony of Western powers. This threat strengthened the view in the West that more economic growth was needed in the Third World to counter the proliferation of Socialist tendencies in those countries.

Although the belief in economic development through private markets remained strong in the West, the experience of the Great Depression and the growth in the Soviet Union gave rise to the view that markets left to themselves might not have been ideal and that extensive government interventions were needed to foster growth, especially in low-income countries. John Maynard Keynes’s macroeconomic theory and the perspectives on economic growth developed after World War II—such as Paul Narcyz Rosentein-Rodan’s idea of Big Push (1943), Arthur Lewis’s dual economy (1955), and W. W. Rostow’s stages of economic growth (1956)—all suggested crucial roles for the government in inducing growth through rapid industrialization. In particular, the import substitution industrialization (ISI) strategy, which was often combined with extensive government controls and state ownership of enterprises, became quite popular in Third World countries. Emphasis on rapid industrialization also entailed commercialization of agriculture and the transfer of its labor and other resources to industrial production.

The ISI strategy was successful in generating growth for a while in many developing countries, especially the ones with larger internal markets. However, those growth spurts came to a halt sooner or later, often because the governments did not have the wherewithal necessary to go beyond the ISI strategy once the easy opportunities of the internal markets were exhausted. ISI policies restricted the economy’s access to global resources, especially new technologies and organizational assets, and weakened the incentives to invest in productivity. By the 1970s these weaknesses were visible in all countries pursuing ISI. With the oil price shocks of 1973–74 and 1979–80 and the sharp rise in interest rates during 1980–83, many developing countries faced major economic difficulties and crises. In particular, the oil-importing countries that had maintained their old strategies in the face of higher oil prices had to borrow heavily and found themselves in full-fledged debt crises in the early 1980s.

Within the mainstream development literature in Western academic traditions, two strands existed from the beginning. One has heavily emphasized economic growth and has been used by organizations such as the World Bank and USAID. The other has emphasized human development and income equality and has been used by organizations such as the United Nations. While the positions of organizations and individuals over these two strands have not been pure, their preferences over the two alternatives have been rather clear. Over time, the UN moved away from purely economic growth toward adopting models with more emphasis on human development; this motion has gone through different stages, such as the basic needs approach and sustainable development and participatory (people-led) development. However, both strands in the field of development/modernization, especially the view focusing on growth, came under serious criticism during the 1960s and 1970s, largely because they were perceived as supporting the US leadership of the Western world and its foreign policy. These criticisms were posed by sociologists and political economists such as Andre Gunder Frank (1967), the founder of dependency theory, and Immanuel Wallerstein, the founder of the world systems theory (1974).

Development initiatives in many parts of the world have been far from successful. By the early 1970s it was evident that development initiatives had failed miserably in many parts of the world with the notable example of Sub-Saharan Africa. The premises of development had not been delivered, poverty and income disparity had increased, and massive migration to cities had increased urban population where increasingly many people live in shantytowns.

Development/modernization has not only failed in many parts of the world as an economic model but, because it has been part of the Pax Americana, it has been coupled with the US support for rootless dictators such as General Pinochet in Chili, Marcos in the Philippines, and Suharto in Indonesia. While it was true that economically there was an increase in per capita income in the cases just mentioned, much of that increase failed to filter through, creating disappointment and dissatisfaction with dictatorships supported by the United States, most of the European countries, and Japan. In the context of the Muslim world, the United States supported two coups, one in Indonesia and one in Iran. A CIA-backed coup in the mid-1960s in Indonesia led to the massacre of close to one million civilians. While the Western prescriptive for achieving development was not always successful, its alternative, the Soviet model, became equally discredited with the gradual decline of the Soviet Union during the late 1970s. It is in this context and in search of an alternative ideology that support for political Islam started to gather momentum.

The demise of the ISI strategy and the crises of the 1970s and early 1980s led to the resurgence of market-fundamentalist (or neoliberal) views in development economics. The economists espousing this view argued that the maladies of developing countries were caused by extensive government interventions that distorted markets and undermined investment incentives. They maintained that governments were inefficient and that the consequences of their interventions were much worse than market outcomes. Besides, extensive intervention had given rise to corruption and had made matters much worse. They suggested that the role of the state should be rolled back to maintaining law and order and property rights so that markets would be unleashed and free trade would bring about prosperity. Some interpreted the economic miracles in East Asia based on export promotion as confirmation of their views and advocated the model (Bhagwati and Desai 1970; Lal 1983; Little 1982, 1988). The World Bank and the International Monetary Fund (IMF) embraced this neoliberal approach and strongly advocated it as part of the structural adjustment programs (SAPs) in many countries of the south. SAPs tried to focus policies on economic growth and led to cutbacks in social welfare programs. As a result, income distribution worsened and in some cases poverty even increased, but long-term growth proved elusive (Easterly 2001, 2006). These policies particularly put major burdens on women from low-income households. For this reason, the neoliberal approach to development has been criticized by many economists and sociologists such as A. Amsden (1985), T. Skocpol (1985), and R. Wade (1992). In the field of feminist economics, many academics documented the negative impact of SAPs on women (Moser 1989; Palmer 1991; Çagatay, Elson, and Grown 1995).

Within the economics discipline, the unsatisfactory outcome of neoliberal policies in many countries led to the rise of a new approach called New Institutional Economics (NIE). The idea was that if institutions (or rules that structure human interactions) did not function well, markets could not work efficiently. (For classic references, see North 1990; Williamson 1985; and Dani Rodrik’s and Daron Acemoglu’s numerous publications on the subject, e.g., Rodrik 1997 and 2008; Acemoglu, Simon, and James 2001; Acemoglu and Robinson 2005; Acemoglu, Golosov, and Tsyvinski 2008.) As a result, the policy agenda shifted toward building institutions that could enable people to create incentives for investment and increased productivity. In the 1990s, this view gained increasing popularity and was adopted by the World Bank under the rubric of good governance. This approach has also had a mixed record. Many countries that tried to improve their governance found out that it is a long, drawn-out process, and that marginal steps in the process do not necessarily bring about commensurate boosts to economic growth. In fact, the process was riddled with difficulties and setbacks. Meanwhile, a number of countries managed to embark on rapid long-term growth by using innovative medium-term shortcuts that facilitate growth. For example, Korea and Taiwan intervened in favor of production for exports and achieved rapid economic growth (Amsden 1985; Wade 1992). In these cases state interventionist policies enabled them to mobilize their resources and to build more prosperous economies. Quite contrary to the claims of neoliberal economists, neither country liberalized its trade until decades after it had started growing fast. They were pragmatic and responsive to their internal and external conditions. Both countries also used coercion to implement their policies. However, they were also