Harvard University

There is debate over the extent to which a banking system can stimulate growth in developing economies. This thesis argues that various macro- and micro-level factors both create and inhibit financial deepening. The state, sources of capital, international financial institutions, and politics directly influence the structure and ability of banks to help promote growth. Iran is chosen as a case study due to its transformation from a traditional finance system and an entirely Islamic banking system.

This thesis studies problems pertaining to capital accumulation in the context of 20th century Middle Eastern economic development. Chapter two outlines economic growth in inter-war Egypt, focusing on the pattern and determinants of Egyptian physical and human capital accumulation, and also distinguishing internal factors from those operating in the inter-war global economy. Chapter three examines the Egyptian cotton policy regime in the first half of the 20th century, and evaluates Egypt's ability to impose an export cotton tariff to its advantage.