AN ANALYSIS OF FOREIGN TRADE AND INDUSTRIAL GROWTH IN IRAN, 1963-1973 (IMPORT, COMMERCIAL POLICY)

This study attempts to evaluate foreign trade policies of the Iranian government since the early 1960s in relation to the growth of manufacturing and the performance of the country's imports and exports. More specifically, the investigation is intended to show that the 1960s import-substitution policy of the Iranian government failed to achieve its objective of greater industrial self-sufficiency, and indeed, was also associated with the poor performance of non-oil exports. After a detailed analysis of the implemented policies, the relative contributions of the growth of manufacturing sector in the growth of GNP and the import dependence of the protected industrial sector are examined. It is found that the growth rate of GNP during the period under investigation, rather than reflecting the growth rate of the protected manufacturing sector, was mainly the result of the growth of its two other components: oil and services. In fact given the enormous amount of investments in manufacturing, the contribution of this sector in the growth of GNP is found to be unimpressive. The poor performance of the agricultural sector also is demonstrated. The performance of imports is studied to show that the growth of "domestic" production of industrial products in Iran, was a reflection of the growth of "foreign" sources of raw materials and intermediate goods. Such "import dependence" on the part of the protected manufacturing sector tended to increase over time. Moreover, the imports of consumer goods also tended to increase in spite of the massive increases in the imports of the primary and intermediate goods required for the production of the protected assembly plants. The performance of exports is studied in the context of the balance-of-payments tables. The negative effects of the adopted import-substitution policies on the growth of non-oil exports are demonstrated.