The purpose of this study was to discover whether there was a relationship between economic development and higher education in Iran from 1953 to 1979. Seven variables were used to define economic development. These variables were factor analyzed and the outcome was three new empirically satisfying variables labeled Rent (R), Finance (F), and Technology (T) which were used as dependent and independent variables in subsequent analyses. In order to define higher education, just one variable, constant dollar expenditures on higher education, was used. Several changes occurred in Iran during 1953 to 1979. Therefore, two intervention variables (for the periods of 1962 and 1973) were used to present these changes. Three models were used in order to examine the relationship between economic development and higher education. Using 2 stage least square in model one tested the hypothesis that the educational variable and development variable (T) were mutually causal. In this model two identification variables (energy consumption and the number of students in higher education) were used in order to identify the effect of the technological growth and expenditures on higher education. This model had two regression equations. In the first equation the dependent variable was the technological dimension of economic growth (T). The only significant effect was the concomitant incremental relationship between energy consumption and technological growth. In the second equation the dependent variable was the expenditures on higher education, and the only significant effect was the second lagged relationship between technological growth and the education. Using 2 stage least square tested the hypothesis that educational expenditures depended upon the import-export ration (R). There was no significant effect in this model. Also using ordinary stage least square tested the hypothesis that educational expenditures depended upon increases in the money stock (F). This model was highly significant. Based on the major findings of this study, the increase of the expenditures on higher education depended upon the increase of the economic growth factors. But the reverse relationship is not evident.