The Iranian government has turned to the development of knowledge as a power projection tool. In Iranian Supreme Leader Ayatollah Ali Khamenei’s speeches from 2011-20, “knowledge based” was among the most frequently used terms when addressing topics such as “jihad” and “economic resistance.” Khamenei’s speeches – a significant tool of political communication and a clear indicator of the supreme leader’s vision – suggest that Khamenei sees the knowledge-based sector as the key element of the Islamic Republic’s resistance and jihad. He has defined knowledge-based companies as those that are “innovative, create jobs, help reduce economic dependence on foreign currencies and import, can help address challenges, and can be exported.” As such, he has promoted initiatives to develop the knowledge-based sector in Iran, and various government bodies have created mechanisms to implement the supreme leader’s vision. Iran Knowledge-Based Network, a key government body that oversees the activities in this sector, defines the knowledge-based economy as “an economic approach in which growth and economic improvement is achieved through advancement of knowledge and technology.” While the definition suggests the focus is generating growth, the government’s strategies indicate that Iran’s knowledge-based sector has instead been prioritizing regime stability and security.

Implementing Khamenei’s Vision

In 2014, Khamenei issued a communique that outlined Iran’s policies on science and technology. The communique directed Iran’s government bodies to commit to a constant “scientific jihad” to turn Iran into a scientific power in the Islamic world. Moreover, it called for scientific talent to be identified and nurtured according to Islam and the tenets of the 1979 Islamic Revolution. It also required policymakers to allocate at least 4% of the country’s gross domestic product to the development of knowledge by March 2025; that is not substantial compared to OECD countries, which, between 2000 and 2010, were investing around 10% of GDP in the knowledge-based sector (through a combination of investing in higher education, expenditure on research and development, and information and communication technology investment).

The main organization in charge of translating Khamenei’s scientific vision into actionable policies is the Supreme Council of Science, Research, and Technology, which is directly controlled by the office of the Iranian president. Several working groups and special commissions have been appointed, and are controlled by, the president or ministries to support knowledge-based projects. For example, in 2011, the Supreme Council of Science, Research, and Technology formed the Center for Knowledge-Based Companies. The center receives and reviews proposals for knowledge-based companies. Should the proposals be accepted, the center provides companies with various levels of government assistance and oversees the practical aspects of starting and running knowledge-based companies.

Both the Supreme Council of Science, Research, and Technology and the Center for Knowledge-Based Companies regularly publish reports on topics including progress on developing the knowledge-based sector, regulations, and future goals for the sector. Nearly all official reports by both organizations directly reference the supreme leader’s vision of resistance and economic jihad. The website of Iran’s main seminary, Hawza, defines economic jihad as “a concept that gives material economic activities a spiritual direction.” Knowledge-based activities in Iran, therefore, have been assumed into the state’s broader vision for jihad focused on a constant effort to undermine the “materialistic values of Western capitalism.”

Policymaking Structure in Iran’s Knowledge-Based Sector

Developing knowledge-based economies has been a core component of economic diversification initiatives in all the resource-rich countries of the region. The Gulf Arab states have made capacity building and human capital development key elements of their economic diversification plans and are concerned primarily with issues including shortages of skilled workers, budgetary reliance on hydrocarbon revenue, and economic sustainability. Although both the Gulf Arab states and Iran have similar desires to develop their knowledge-based sectors, the rationales underpinning the effort differ significantly. Iran’s focus on developing a knowledge-based economy stems from the state’s ambition to project military power and is driven by Khamenei’s narrative of economic jihad and resistance rather than an economic diversification strategy.

Military and Security Dominate

Iran’s knowledge-based sector is intensely focused on the military and security fields, which are integral to the regime’s political survival and its global power projection aspirations. This is reflected in the government’s support initiatives for the sector, which can be categorized based on their end products or services by using the Center for Knowledge-Based Companies’ list of knowledge-based goods and services. Companies that provide goods or services related to network security and network infrastructure are registered under “IT and software,” which was the largest category of knowledge-based companies in 2022. This is an area that can facilitate the state’s use of internet infrastructure for filtering and surveillance. During the latest rounds of mass uprisings in Iran (in 2019 and 2022), the government launched a violent crackdown on protesters while implementing a countrywide internet shutdown. Such measures of repression are certainly accelerated by the government’s heavy investment in related sectors.

The second-largest category of knowledge-based companies is “electronic hardware,” which includes radar and radio equipment and other technologies that are primarily used in the defense sector. The third-largest category is “machinery and equipment,” which includes nuclear, aerospace (including drone and missile), and oil and gas technologies. Examining the areas most registered knowledge-based companies in Iran are involved with strongly suggests the government’s policies for developing the sector are directed toward advancing Iran’s military, nuclear, and cyber capabilities.

Registered Knowledge-Based Companies by Field (2013-22)

While Iranian officials have frequently criticized U.S. sanctions for limiting Iran’s access to medical technology and pharmaceutical products, the government has been supporting significantly fewer knowledge-based companies in the medical or health-care sector compared to fields related to defense. Instead, in recent years, the regime has heavily invested in developing sophisticated cyber warfare capabilities and missile technology. All in all, the sectoral structure of Iran’s knowledge-based companies indicates that policies for developing the sector have been mostly geared toward strengthening the country’s military and cyber capabilities, which are ultimately aimed at preserving the regime’s stability and global power projection aspirations.

Support Measures

The government has implemented various measures to support knowledge-based companies. In November 2010, the Iranian Parliament ratified the Law of Supporting Knowledge-Based Companies and Commercialization of Innovations, requiring the government to support knowledge-based companies through tax exemptions, financial support, and free access to land. As most of the registered companies develop goods and services that are used primarily to advance the regime’s military, nuclear, or security capabilities, the regime is clearly distributing resources toward firms that support its military and security strategies.

Distribution in Power Centers

The distribution of knowledge-based companies across different provinces in Iran also shows a concentration in power centers. Most companies operate in Tehran, while Isfahan province, with nearly one-fifth of the number of companies in Tehran, ranks second. Poorer provinces that have historically had high unemployment, low investment, and poor infrastructure, such as Ilam, Kohgiluyeh and Boyer-Ahmad, Sistan and Baluchistan, and Kurdistan, have the fewest registered companies. The concentration of companies in the capital, sectoral breakdown, and centralized government planning are in line with the existing political and economic dynamics in Iran that are driven by: 1) the state’s focus on its longevity and broader regional and global security agenda; 2) monopolization of economic and political power by a small elite; and 3) a concentration on central territories or cities for investment and economic activities.

Registered Knowledge-Based Companies by Location (since 2013)

Iran is prioritizing supporting knowledge-based companies whose goods and services serve the regime’s military and security agenda and whose location follows the existing economic structure in Iran, in which poorer provinces are denied access to the vast majority of economic activities and government investment projects. In short, the development of the knowledge-based economy, which is promoted by the supreme leader and is an integral element of his world vision, is designed to help the political elite control the resources distributed through, and achievements made by, this sector. The concept of the knowledge-based economy in Iran fundamentally differs from that of the developed world, in which the main aim of advancement of knowledge and technology is to boost growth. In the Iranian case, the sector is a key element of the economic jihad strategy of the state that is concentrated on pursuing its security and political agenda, with virtually no regard for the country’s broader economic development.