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The Role of Military Expenditures in Pre‐Revolutionary Iran's Economic Decline

Published online by Cambridge University Press:  01 January 2022

Robert E. Looney
Robert E. Looney*
Affiliation:
Naval Postgraduate School
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Extract

I told the Shah that if the Army budget were increased we could do little if any thing for agriculture, education or public health. He said, “Very well, then; we'll have to postpone those things.”

This incident occurred in 1943, a year after the Shah had succeeded his father and was recounted by A. C. Millspough, then financial advisor to the Iranian government.

By the 1970s, however, the Iranian government was denying the relevance of the “guns versus butter” tradeoff for the country. The Shah posed the problem differently, “What is the use of having an advanced industry in a country which could be brought to its knees when faced with any small asinine event?” Asked on a subsequent occasion whether the desire for maximum national power implicit in such defense expenditure was compatible with the efforts to achieve maximum economic development, he replied, “It is not only compatible but essential.

Type
Research Article
Information
Iranian Studies , Volume 21 , Issue 3-4 , 1988 , pp. 52 - 83
Copyright
Copyright © 1988 Association For Iranian Studies, Inc

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References

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4 Cf. Steve Chan, “The Impact of Defence Spending on Economic Performance: A Survey of Evidence and Problems,” Orbis (Summer, 1985), pp. 403-434.

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6 Fred Halliday, Iran : Dictatorship and Development, pp. 71-71.

7 Ibid., p.73.

8 Ibid., pp. 73-74

9 Emile Benoit “Growth and Change in Developing Countries,” Economic Development and Cultural Change (1978), p. 277.

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20 See C. Lyttkens and C. Vedovato, “Opportunity Costs of Defence: A Comment on Dabelko and McCormick,” Journal of Peace Research (1984), pp. 395-397.

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23 Ibid.

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36 Ibid.

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38 Ibid., p. 39.

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40 Joerding, op. cit., p. 39.

41 Ibid., p. 39.

42 Robert Looney, “Impact of Oil Revenues on the Pre-Revolutionary Iranian Economy,” Middle Eastern Studies (January 1985), pp. 61-71.

43 A similar approach was used in R. Mallakh and M. Kadhim, “Absorptive Capacity, Surplus Funds and Regional Capital Mobility in the Middle East,” Reviste Internazionale de Scienze Economiche e Commerciali, (April 1977), pp. 308-325.

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