Thursday, October 13, 2016

An Alternative Look At Iraq’s 1970s Economic Development

The 1970s is widely considered a golden period for Iraq. During this time, oil production increased, and astute government planning was able to use that revenue to nearly quadrupled per capita Gross Domestic Product (GDP). Life expectancy, school enrolment, and literacy all increased as well. Indiana State University Economics Professor Bassam Yousif studied this period, and while acknowledging the great gains that were made also argued that it was eventually undercut by politicization by the Baathist government.

Iraq’s economy and society saw tremendous development in the 1970s. From 1970 to 1979 real Gross Domestic Product (GDP) more than doubled due to rising oil production and prices. In 1970 oil production averaged 1.5 million barrels a day. By 1979 it was up to 3.5 million. During that same time per capita GDP went from $232 to $851. At the same time life expectancy, school enrolment, and literacy also increased. Industry got a large boost, but agriculture was largely stagnant. That was partly due to government subsidies that pushed down prices for farm products, and political decisions to control rural areas. These were all important gains. What was most impressive was that not only were the aggregate numbers like GDP going up, but that the general public was benefiting as well through things like education.

Bassem doesn’t disputes the development that Iraq experienced during the decade, his argument was that it was undercut by the Baath Party. The professor believed that institutional capacity is the main factor in economic development. That is especially true in Iraq where most of the country’s revenue comes from oil, which is deposited with the state. Bassem defined capacity as the ability of the government to form and carry out policies, regulations, and provide services. That works best when there is a level of autonomy within the bureaucracy that allows it to carry out its plans, and when there is a highly trained and educated staff. The development in Iraq in the 1970s helped with the latter because of the huge growth in schooling and middle class professionals, which the state could draw upon. On the other hand, President Ahmad Hassan al-Bakr’s government and his Baath Party began politicizing the public sector, undermining the former. For example, the regime began rewarding its supporters through patronage. That included appointing Baath members and its backers to important posts undermining the meritocracy and efficiency of the administration. The government also started moving away from long term economic planning to annual investment plans that were partly based upon giving benefits to its friends. That brought into question whether the growth witnessed in the 1970s would continue into the 1980s. That can never be tested however as the Iran-Iraq War started and completely derailed the economy.


Yousif, Bassam, “Iraq’s stunted growth: human and economic development in perspective,” Contemporary Arab Affairs, 3/31/16

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