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Ferhang Jalal - The Role of Government in the Industrialization of Iraq 1950-1965

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ROUTLEDGELIBRARYEDITIONS:
THE ECONOMY OF THE MIDDLE EAST
Volume 27
THE ROLE OF GOVERNMENT IN THE
INDUSTRIALIZATION OF
IRAQ 19501965

THE ROLE OF GOVERNMENT IN THE
INDUSTRIALIZATION OF
IRAQ 19501965
FERHANG JALAL
The Role of Government in the Industrialization of Iraq 1950-1965 - image 1
First published in 1972
This edition first published in 2014
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX144RN
and by Routledge
711 Third Avenue, NewYork, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
1972 F. Jalal
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN: 978-1-138-78710-0(Set)
eISBN: 978-1-315-74408-7(Set)
ISBN: 978-1-138-81547-6(Volume 27)
eISBN: 978-1-315-74445-2(Volume 27)
Publishers Note
The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.
Disclaimer
The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace.
THE ROLE OF
GOVERNMENT IN THE
INDUSTRIALIZATION OF
IRAQ 19501965
Dr. Ferhang Jalal
First Published in 1972 by FRANK CASS AND COMPANY LIMITED 67 Great Russell - photo 2
First Published in 1972 by
FRANK CASS AND COMPANY LIMITED
67 Great Russell Street, London, WC1B 3BT
Distributed in the United States by
International Scholarly Book Services, Inc.
Beaverton, Oregon 97005
Library of Congress Catalog Card Number 77-171260
ISBN 0 7146 2586 8
Copyright 1972 F. JALAL
All Rights Reserved. No part of this publication may be reproduced in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Frank Cass and Company Limited in writing.
Printed in Great Britain by
The Whitefriars Press, London and Tonbridge
Contents
Table No.
Since 1950 the Government of Iraq has attempted vigorously to develop the economy. In this study I have discussed, analysed and appraised a number of policies adopted by the Government to promote the growth of the industrial sector. The rest of the economy is brought into the picture only to show the relative importance of the industrial sector and to clarify certain aspects of its relations with other sectors. I have used statistics whenever possible, but the study has an institutional bias because I wish to stress the institutional and administrative bottlenecks to industrial development in Iraq. I have concentrated on the period 195065, but where the discussion became concerned with the historical development of institutions and polices I have covered a longer time period.
The volume is divided into seven chapters. The first chapter is devoted to the Governments efforts to develop the economy before 1950 and forms a background to the study of the period 195065. In the Governments attempts to create an organizational system to formulate and implement its industrial plans are discussed. This chapter also analyses the characteristics of Iraqs public administration and describes the internal organization of the Ministry of Industry.
I outline the implementation process for investment programmes. Because of the reorganization of the planning machinery in 1959, and the change in policy after the revolution of July 1958, I divided the chapter into two sub-periods 195058 and 195965 and have made comparisons between the periods.
I summarize the study and offer my conclusions.
The Government has not sought to encourage the growth of industry through a multiple exchange rate policy or through bilateral trade agreements. Nor did it guarantee minimum profits on investment in industry. These policy instruments are therefore not relevant to this study.
I must express my indebtedness to my colleagues in the Iraqi Ministry of Industry and other Departments who have provided me with all published and unpublished material, laws and regulations required for this study. In particular I acknowledge my thanks to Mr. M. H. al-Baya, Mr. M. Said and Mr. S. Atto.
I wish also to thank the Industrial Bank of Iraq, and the British Council who jointly sponsored my scholarship without which it would have been very difficult to undertake this study.
I have had many useful discussions with Dr. A. Kelidar and Mr. R. Mabro. My greatest obligations are however to Professor E. T. Penrose and Dr. P. K. OBrien for their continuous encouragement and advice in the preparation of this study. For any mistakes made, however, they must not be held responsible.
Finally, my wife has suffered a great deal from my academic ambitions; many thanks to her for her patience.
1970
Baghdad
F. Jalal
The main purpose of this chapter is to show governmental efforts to develop the economy before 1950, as a background to my study during the period 195065. This chapter includes a brief description of the economy in 1920, which is compared to conditions of the country in 1950, and shows the slow progress during those three decades. The role of Government in the development of the economy is shown through the analysis of its capital expenditure in comparison to total government expenditure and gross capital formation. Two of the main factors which caused slow progress were shortage of Government revenue and political instability. The vast increase in oil revenues from 1950 solved the first problem. By comparing oil revenue to other sources of government finance, state development expenditure, and exports other than oil, it is possible to show that at that time, the stage was set for a much higher rate of capital formation. It remained for the Government, however, to devise an organization which could provide continuity in development work.
Present-day Iraq, which consists mainly, but not entirely of ancient Mesopotamia, became a political entity in 1920. The first Iraqi Government was formed under the British Mandate in 1921 and achieved independence in 1932.1
From 1920, the country started simultaneously to build a national administration and to develop its resources. Conditions at that time were such, that its economic development required the provision of basic public services, without which productive activity of all kinds cannot function properly. These include law and order, education and public health, transportation and communication, power and water supply, irrigation, drainage and flood control. This was necessary because during the Ottoman rule in Iraq (15341917), public services remained meagre and economic activity was handicapped by lack of social overhead capital. For example in 1878, it cost about $1.50 to transport a dollars worth of grain from Hilla to Baghdada distance of about 60 miles,2 because Iraqs roads were mere tracks suitable only for goods carried by animals. Moreover, the administration outside the large towns was ineffective; hence the need to pay dues to tribes through whose territory goods were transported.3
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