Investigating the Impact of Uncertainty in Technology, Innovation, and Globalization on Income Decile Inequality in Iran: Fuzzy Regression Approach

Income inequality remains a critical socioeconomic challenge in Iran. This study examines how technological advancement and globalization interact to shape income distribution within Iran's unique context of sanctions, oil dependence, and complex regulations. It investigates technological innovation's labor market uncertainties, the multidimensional impacts of globalization, and how these factors influence households across the entire income spectrum. Centering on Iran's informal sector, hydrocarbon economy, and youth demographic, the analysis challenges assumptions about the inherently equalizing potential of these forces.
Methodologically, annual time-series data (2008–2021) were gathered from the Iranian Statistical Center, UNCTAD, and the KOF Institute. Technological innovation was measured via R&D expenditure, patents, and high-tech exports; ICT penetration via connectivity stats; and globalization via its economic, social, and political dimensions. The study employs fuzzy regression modeling, implemented in MATLAB, to handle volatility and non-linearities. Households were stratified into ten income deciles, grouped into the vulnerable class (1–4), the middle stratum (5–8), and the economic elite (9–10).
Findings reveal nuanced patterns. For vulnerable households (deciles 1–4), technological innovation shows equalizing potential only when contextually appropriate. Agricultural technologies demonstrated three to five times greater poverty reduction impact than manufacturing innovations. Conversely, digital transformation delivered disappointing results; despite high mobile penetration, ICT's inequality reduction coefficient was negligible (0.12), indicating "empty connectivity" without complementary infrastructure and literacy. Productive low-tech innovations outperformed sophisticated digital solutions. Globalization's impact was paradoxical: economic globalization showed near-zero correlation with improved outcomes, while social globalization exhibited a modest positive effect.
Within the middle stratum (deciles 5–8), technological adoption raises incomes but exacerbates intra-group inequality, with automation creating clear winners and losers. The impact of trade globalization turned negative after sanctions intensified post-2012. Skill-biased technical change partially offset Gini coefficient reductions. This group's reliance on domestic innovation ecosystems became a crucial stabilizing factor during external shocks.
For the economic elite (deciles 9–10), technology and globalization act synergistically to enhance wealth accumulation. Financial globalization enables technology arbitrage, and global knowledge networks complement domestic R&D. For this group, digital tools show a strong positive correlation with wealth accumulation. The study identifies an inverted U-curve relationship: basic technologies reduce disparity, whereas advanced technologies like AI initially widen the gap until institutional adaptations occur.
Cross-cutting insights emerge. First, access to finance doubles the inequality-reduction effects of technology for the middle deciles. Second, policy sequencing is critical; globalization's benefits materialize only after a foundational technological capacity is achieved. Third, sectoral specificities dominate, with agricultural technology showing four times more pro-poor impact than service-sector innovations.
The study concludes that context-aware, sequenced policy packages are essential. A three-tiered set of recommendations is proposed. For low-income groups, focus on foundation-building: prioritizing appropriate, often low-tech solutions, implementing hybrid technology-social protection programs, and developing intermediate technologies. For the middle class, enhance productivity through technology-upgrading funds for SMEs, establishing sanction-resistant innovation networks, and reforming technical education. For high-income groups, foster inclusive globalization by linking elite privileges to developmental conditionalities, channeling remittances into technology funds, and promoting dual-use technologies. A macro-level "technological readiness index for inequality reduction" is proposed to guide policy. This framework offers a pragmatic roadmap for fostering equitable outcomes in Iran and similar economies.