Adjustment to a Foreign Exchange Shock: Iran, 1951–1953

Clawson, Patrick; Sassanpour, Cyrus

doi:10.1017/s0020743800031639

Cited by 6 publications

(5 citation statements)

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“…The 1950s crisis is discussed in some detail by Clawson and Sassanpour (1987) where it is shown that the principle exchange rate applicable to most imports and to non-oil exports was allowed to depreciate by 100 percent between 1950 and 1953. 5 In both of these episodes the cause of the crisis was an abrupt and substantial loss of foreign exchange revenues from oil exports, and in both cases the immediate response by the government was to resort to direct control of imports through quantitative restrictions and import licenses.…”

Section: Compressionmentioning

confidence: 99%

“…'For interesting accounts of the developments in Iran's balance of payments over the 1951-53 period see Hossein Mahdavi (1970) and Patrick Clawson and Cyrus Sassanpour (1987). 2 Notice that "government" here refers to the general government and does not cover the operations of the foundations and the private donations towards the war expenditure.…”

Section: University Of California Los Angelesmentioning

confidence: 99%

“…However, the two governments followed very different policies with respect to the exchange rate, price subsidies, and non-oil exports. The 1950s crisis is discussed in some detail by Clawson and Sassanpour (1987) where it is shown that the principle exchange rate applicable to most imports and to non-oil exports was allowed to depreciate by 100 percent between 1950 and 1953. The Mossadegh government also followed a policy of fiscal restraint and, for the most part, relied on market forces and the price mechanism for the economy's internal and external adjustments to the substantial loss of revenues from oil exports.…”

Section: Compressionmentioning

confidence: 99%

“…'For interesting accounts of the developments in Iran's balance of payments over the 1951-53 period see Hossein Mahdavi (1970) and Patrick Clawson and Cyrus Sassanpour (1987).…”

Section: University Of California Los Angeles and Trinity College Cmentioning

confidence: 99%

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The Iranian Foreign Exchange Policy And The Black Market for Dollars

Pesaran¹

1992

Int. J. Middle East Stud.

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As a result of the oil price shocks, the 1979 revolution, and the eight-year war with Iraq, fundamental changes have taken place in Iran's foreign exchange position as well as in its exchange rate policy. The viable data over the period 1979-80 to 1988-89 clearly show that, despite the revolutionary rhetoric, very little has been done to reduce the country's dependence on oil exports as a source of foreign exchange and government revenues. Instead, in the face of falling oil revenues and the country's increasing international isolation, coupled with the regime's unwillingness to incur foreign debt, the government has adopted a severe "import compression" policy through selective tariffs and quotas, strict control of private and government imports by means of import licenses, and the imposition of foreign exchange allocations on government agencies. The result has been an ever-rising premium on the U.S. dollar in the "black" market, a highly overvalued official exchange rate, a substantial increase in rent-seeking activities at the expense of production, a severe misallocation of resources, and loss of output and industrial capacity.Some of these developments may have been unavoidable and can be traced to forces outside the control of the Islamic Republic. The war with Iraq, trade sanctions, and the collapse of the oil prices in 1986 have all clearly contributed to the foreign exchange shortages and the rise in the black market premium. But the maintenance of a highly overvalued official exchange rate, along with strict direct control of imports, has created ample opportunities for rent-seeking activities with very harmful consequences for the performance of the real economy.Irrespective of whether one approves of the import-substitution strategy as an appropriate industrial policy for Iran's future economic development, the present mix of trade and exchange rate policies is difficult to justify on economic grounds. The adherence to these policies over the past decade has accentuated, instead of correcting, the fundamental imbalances that had begun to emerge in the Iranian economy during the last years of the Shah's regime. What is required is an industrial and commercial policy geared to the regeneration of private investment and the promotion of non-oil exports. It is difficult to see how this can be achieved without a realignment of exchange rates and a gradual liberalization of imports. The rise in the black market premium needs to be checked and significantly reversed; otherwise a substantial part of the private sector resources will continue to be diverted from production to rent-seeking activities with all the corruption and the waste that such

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Section: Compressionmentioning

confidence: 99%

Section: University Of California Los Angelesmentioning

confidence: 99%

Section: Compressionmentioning

confidence: 99%

“…'For interesting accounts of the developments in Iran's balance of payments over the 1951-53 period see Hossein Mahdavi (1970) and Patrick Clawson and Cyrus Sassanpour (1987).…”

Section: University Of California Los Angeles and Trinity College Cmentioning

confidence: 99%

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The Iranian Foreign Exchange Policy And The Black Market for Dollars

Pesaran¹

1992

Int. J. Middle East Stud.

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“…Accounts of the developments leading to the nationalization of the oil industry under Mosaddeq's Premiership can be found inRuhani (1971), Fesharaki (1976), Stobaugh (1978 andBamberg (1994, Chapters 15-16). 3 SeeClawson and Sassanpour (1987) for a detailed examination of the adjustments to the foreign exchange shortage during1951-1953. …”

mentioning

confidence: 99%

The Iranian Economy in the Twentieth Century: A Global Perspective

Esfahani

Pesaran

2009

Iranian stud.

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This paper examines the economic transformation of Iran in a global context through the twentieth century. At the start of that century, the Iranian economy had long remained stagnant, poor, and largely agrarian, with a marginal role in the world economy. By the turn of 21 st century, Iran had transformed into a complex and relatively large economy with a non-negligible impact on many parts of the world. While the initial conditions and the evolution of domestic institutions and resources played major roles in the pace and nature of that transformation, relations with the rest of the world had crucial influences as well. This paper focuses on the latter forces, taking into account their interactions with domestic factors in shaping the particular form of economic development in Iran. We study the ways in which the development of the Iranian economy was affected by international price movements and by the ebbs and flows of trade, investment and worldwide economic growth. In considering these effects, we also analyze the role of domestic political economy factors and policies in enhancing or hindering the ability of domestic producers to respond to external challenges and opportunities.

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Iran's Karaj Dam Affair: Emerging Mass Consumerism, the Politics of Promise, and the Cold War in the Third World

Schayegh

2012

Comp Stud Soc Hist

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AbstractThis paper examines two intertwined processes that shaped post-war Tehran. One was a ravenous demand for electricity, part of a surge in popular expectations for consumer goods and higher standards of living. The other was the construction of the Karaj Dam to meet that demand. Consumerist expectations, especially among Tehran's bourgeoning middle classes, developed together with a West-centered but ultimately global maturation of mass consumer culture, with the cultural Cold War, and with the shaky post-1953 regime's politics of promising higher living standards. The Karaj Dam became possible when that regime frightened its patron—the U.S. administration that dreaded Soviet influence—into helping pay for the project despite reservations in the U.S. Congress and among technical specialists. The dam was not simply a top-down state (or U.S.) project—it was also caused by and in that sense belonged to Tehranis. I draw on archival and published primary sources, images, and secondary literature to tell a story of society-state and domestic-global interactions that characterized many Third World countries. This paper builds on past studies of relationships between the Cold War and Third World development, and of the transnational history of development/modernization. But it transcends their focus on elites, and that of other scholars’ on subaltern victims, and argues that analyses of Third World development and the Cold War must include the middle classes and, conceptually, social history.

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Adjustment to a Foreign Exchange Shock: Iran, 1951–1953

Cited by 6 publications

References 1 publication

The Iranian Foreign Exchange Policy And The Black Market for Dollars

The Iranian Foreign Exchange Policy And The Black Market for Dollars

The Iranian Economy in the Twentieth Century: A Global Perspective

Iran's Karaj Dam Affair: Emerging Mass Consumerism, the Politics of Promise, and the Cold War in the Third World

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