Iran's growing integration into the global economy, mainly through exports of petroleum, has relieved the foreign exchange constraint and made revenue for development available to the state. But the social and political reaction to ‘development from above’ or ‘industrialisation at gunpoint’ certainly proves that underdevelopment is not just matter of shortage of capital. The current features of Iran's industrial sector are: that the small scale predominates: that the capital goods sector remains small: that many ‘modern’ plants are really assembly plants: that imports are dominated by capital goods, and that exports of manufactures remain small. Whilst this does not add up to Frankian ‘accumulated backwardness’, neither is it full blown industrialisation. It is a picture of coexistent dependency and industrialisation.