Oil income, industrialisation bias, and the agricultural squeeze hypothesis: New evidence on the experience of Iran

Abstract

The widely held view that Iranian industrialisation policies during the 1962–77 period led to a squeeze of resources out of the agricultural sector is re‐examined. Measurements of internal terms of trade and net agricultural resource flows are presented for the first time, which show a sizeable resource inflow into the agricultural sector. It is argued that the agricultural policy problem was a consequence of inefficient resource use in this sector, rather than of an inadequate level of resource transfers to agriculture.

Notes

Department of Economics, University of Warwick, Coventry, CV4 7AL, UK. I would like to thank Hashem Pesaran, Hasan Hakimian and P.J.K. Kikuchi for their helpful comments on an earlier version of the article.