Book Description

Iraq is a poor country with a per capita income of I.D. 76 (0 212) per annum in 1965. She has underdeveloped resources and large supplies of foreign exchange from her oil exports. She is not short of unskilled labour or land and excellent opportunities exist for development in agriculture. Since 1950 the governments have attempted vigorously to develop the economy and have stressed (probably incorrectly) industry and industry has grown from 7.6% of national income in 1953 to 11.2% in 1963 at an annual average rate of 11.5%. In this thesis I have discussed, analysed and appraised a number of policies adopted by the government of Iraq designed to promote the growth of the industrial sector. These policies were of two kinds: (i) The establishment of enterprises financed, constructed and operated by the government. (ii) The encouragement of the expansion of private industrial enterprises, by protecting them from foreign competition, through the provision of finance, by way of tax exemptions of all kinds and through controls over the allocation of investment. This thesis shows that a key constraint on a more rapid rate of industrial growth and the long term development of a viable industrial structure has been the administrative bottleneck. Thus central planners formulated investment programmes without regard to the capacity of government agencies to implement their plans. Consequently only a fraction of funds available for industrialization plans was actually utilized. Moreover because of the low quality and limited capacity of the administrative machinery in relation to the volume and complexity of tasks imposed on it, tariff rates were determined haphazardly, import prohibitions were determined without proper reference to economic principles; tax exemptions were extended arbitrarily; no proper steps were taken to provide industry with sufficient working capital; and the government attempted to control the allocation of private investment by means of very restrictive and cumbersome procedures. Consequently some of the designed incentives acted as impediments to private efforts.