Abstract
I told the Shah that if the Army budget were increased we could do little if anything 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,1 then financial advisor to the Iranian government. By the 1970s, however, the Iranian government was denying the relevance of the ‘guns versus butter’ trade-off for the country. The Shah viewed 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 defence expenditure was compatible with the efforts to achieve maximum economic development, he replied, ‘It is not only compatible but essential. The one is worthless without the other. There is no economic power without military power.’2
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Notes and References
A. C. Millspough, Americans in Persia (Washington: Brookings Institution, 1946), p. 77.
Shahram Chubin, ‘Implications of the Military Buildup in Less Industrial States’, in V. Ra’anan (ed.), Arms Transfers to the Third World: The Military Buildup in Less Developed Countries (Boulder, Colorado: Westview Press, 1978), p. 268.
Cf. Fred Halliday, ‘Iran, the Economic Contradictions’, MERIP Reports (July–August 1978), pp. 9–18; Iran: Dictatorship and Development (New York: Penguin Books, 1979); ‘Theses on the Iran Revolution’, Race and Class (Summer 1979), pp. 81–90; ‘The Genesis of the Iranian Revolution’, Third World Quarterly (October 1979), pp. 1–16.
Cf. Steve Chan, ‘The Impact of Defense Spending on Economic Performance: A Survey of Evidence and Problems’, Orbis (Summer 1985), pp. 403–34.
Saadet Deger and Ron Smith, ‘Military Expenditure and Growth in Less Developed Countries’, Journal of Conflict Resolution (1983), pp. 335–53.
Fred Halliday, Iran: Dictatorship and Development, pp. 71–2.
Ibid., p. 73.
Ibid., pp. 73–4.
Cf. P. C. Frederiksen and Robert E. Looney, ‘Another look at the Defense Spending and Development Hypothesis’, Defense Analysis (1985) pp. 205–10; P. C. Frederiksen and Robert E. Looney, ‘Defense Expenditures and Economic Growth in Developing Countries: Some Further Empirical Evidence’, Journal of Economic Development (Summer 1983); and P. C. Frederiksen and Robert E. Looney, ‘Defense Expenditures and Economic Growth in Developing Countries’, Armed Forces and Society (Summer 1983).
Cf. R. E. Looney, The Economic Origins of the Iranian Revolution (New York: Pergamon Press, 1983).
Thomas Walton, ‘Economic Development and Revolutionary Upheavals in Iran’, Cambridge Journal of Economics (September 1980), pp. 271–92.
Firouz Vakil, Determining Iran’s Financial Surplus 1352–1371: Some Management Concepts (Tehran: Institute of International Political and Economic Studies, 1975), p. 6.
Hussein Razavi and Firouz Vakil, The Political Environment of Economic Planning In Iran, 1971–83 (Boulder, Colorado: Westview Press, 1984), p. 74.
Ibid., p. 102.
Ibid.
Wayne Joerding, ‘Economic Growth and Defense Spending: Granger Causality’, Journal of Development Economics (April 1986), pp. 35–40.
Ibid., p. 36.
Cf. Deger and Smith, ‘Military Expenditure and Growth’.
Joerding, ‘Granger Causality’, p. 39.
Ibid., p. 39.
Robert Looney, ‘Impact of Oil Revenues on the Pre-Revolutionary Iranian Economy’, Middle Eastern Studies (January 1985), pp. 61–71.
A similar approach was used in R. Mallakh and M. Kadhim, ‘Absorption Capacity, Surplus Funds and Regional Capital Mobility in the Middle East’, Reviste Internazionale de Scienze Economiche e Commerciali, (April 1977), pp. 308–25.
Cf. L. M. Koyck, Distributed Lags and Investment Analysis (Amsterdam: North Holland, 1954).
Cf. P. Rao and R. Miller, Applied Econometrics (Belmont, CA: Wadsworth Publishing Company, 1971), pp. 88–92.
R. Looney, Economic Origins of the Iranian Revolution.
A. Saikal, The Rise and Fall of the Shah (Princeton: Princeton University Press, 1980).
R. K. Ramazani, ‘Who Lost America? The Case of Iran’, Middle East Journal (1982).
S. Akhavi, Religion and Politics in Contemporary Iran: Clergy-State Relations in the Pahlavi Period (New York: State University of New York Press, 1980).
Amir Taheri, ‘Public Discontents’, Kayhan International (13 July, 1978).
J. A. Bill, ‘Iran and the Crisis of ‘78’, Foreign Affairs (1978).
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© 1988 Robert E. Looney
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Looney, R.E. (1988). The Role of Military Expenditures in Pre-revolutionary Iran’s Economic Decline. In: Third-World Military Expenditure and Arms Production. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-09658-9_7
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