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Iran has adopted a planning approach for the development of its industries, including
small-scale sector. The first seven-year development plan was approved by the
Iranian Parliament in 1949. Critics have described the plan as deficient in both, its basic
planning methodology as well as in its objectives. In fact, the planning was considered as
infrastructural projects, which were to be executed by the newly established government. The 1951-53
crises over oil nationalization and the subsequent loss of oil revenues made the
actual implementation of the plan impossible (Karshenas, 1990). The second plan initiated in
1955, was largely financed out of oil revenues. Similarly, investments for inclusion in the plan
were chosen without any particular systematic framework. The allocations of the plan in
the industrial sector were concentrated in several major projects involving the construction
or modernization of large textile, sugar and cement factories (Firoozi, 1979). Despite the
far-reaching impacts, that the resumption in oil revenues was to have on the economy,
the process of oil-induced economic development had certain ramifications. In general,
an overview of the 1962-73 period and the industrialization process, show how
oil-induced distortions not only impeded the process of diversified economic development, but
actually created a productive structure that was inherently stagnant in Iran (Karshenas, 1990).
In effect, some of the measures imposed by the "Economic Stabilization Program,"
such as restrictions on the import of non-essential goods and high tariffs, facilitated the state's
shift to import-substitution industrialization. In the 1950s, a rapid increase in the import
of industrial products was indicative of "an immense gap between the structure of
domestic demand and supply for industrial product" (Pesaran 1985 and Karshenas, 1990). |
