In this research a geographical analysis has been made of the rural economy in the margin of Dasht-e-Kawir Central Iran. In this region, as in all rural, areas, two groups of factors affect the rural economy; physical and socio-economic. Severe physical conditions, e.g. arid zone climate, shortage of water, saline soils and limitation of cultivable land, have restricted the agricultural development in the region. The main objective in the study of the physical conditions, is to recognize the areas capability for agricultural development and the influence of environmental conditions on the socio-economic factors. The severity of physical factors has encouraged the development of the craft industry in the area in general, and in the Abuzaid- Abad in particular. Thus over 50% of the rural income is derived from the carpet making industry, in which women provide the labour. However, the rural economy in the area can not be assessed without examining the impact of the physical upon the socio-economic factors. In this study the two groups of factors have been investigated separately. In attempting to help the agricultural development, to increase the villagers' income and to improve rural welfare in the region, the complete set of factors must be analysed to identify the N strongest correlation between them which is relevant to the above purposes. In chapters one to four the physical factors have been discussed. Chapters five to ten are concerned with socio economic and technical factors. In chapter eleven the rural income has been described. The conclusions summarise the most significant general findings of this study besides suggesting some further research for the future.