Maintaining a sustainable and relatively high economic growth rate is a major short- and long-term challenge facing Iran. To keep up the growth momentum, Iran not only must replace and upgrade its aging capital equipment in both the oil and non-oil sectors, but also needs to invest heavily in new industries, technology, human capital, and infrastructure. Higher growth is a socially desirable objective since it raises per-capita income, at least in par with middle-income countries, and it provides the material resources for reducing poverty and promoting sustainable human development. Moreover, due to demographic and gender factors, the rate of growth of labor supply in the next decade is expected to be fairly high and a relatively high rate of economic growth is necessary to boost the demand for labor. A rapid population growth at the rate of 2.6 percent per annum increased the population from 26 million in 1966 to nearly 66 million in 2002. Population growth has recently slowed down and is estimated at 1.65 percent for the next decade. Yet, the growth rate of the working-age population will be significantly higher, about 2.6 percent. According to World Bank estimates, by 2010 total population will be 75.9 million. Working-age population will be 51 million—compared to an estimated 43 million at the end of 2002.

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.

Just as natural history is the mother of the biological sciences, social history is the mother of the social sciences. Classical political economy was developed in a dynamic era, a period of European history where a series of long-term social developments were approaching their peak in the French Revolution and the Industrial Revolution of England. It is not at all surprising that Adam Smith and David Hume spent time with the French Physiocrats, notably Quesnay and Turgot, and with the French philosophes, especially though not exclusively Voltaire and Rousseau.

It was precisely the dynamic quality of the era that led economic and social and political theorists alike to look into the nature and causes of change, and therefore regard history as a principal source of the foundations of their knowledge. A similar process was taking place, but more slowly, among biologists who were trying to discover the nature of life and the origin of species, and the causes of long-term biological changes through time. Darwinism was in fact the end, not the beginning, of this process.