This work is an attempt to examine the effect of non-economic factors in economic development focusing on the case of Iran. After distinguishing non-economic and economic factors, to tackle the topic, a wide and deep literature review was undertaken to see how development economists as well as other social scientists viewed economic and non-economic factors in their theories. The practical focus was on non-economic factors. A broad study considering the attitude of Islam towards material life and economic progress was also undertaken. This study suggested that Islam has great potential to promote a society to achieve a reasonable level of economic development though interpretations and practices often fail to follow Islamic texts. The main investigation involved fieldwork in Iran to identify obstacles to production. The results were strongly supportive to the idea that severe lack of an appropriate culture, especially amongst officials and politicians, fostering economic development and the existence of a biased world view towards socio-cultural values unsympathetic to development have caused wastage of resources, frustration of management, and consequently backwardness in Iran.