An analysis of the role of the oil sector in the Iraqi economy, 1953-75, and an appraisal of the petrochemical industry as a strategy for achieving future self-sustained development.
This thesis is an attempt to establish an alternative strategy that could enhance the economic development of Iraq. It does so with a feasibility study of a petrochemical complex geared towards fertilizer production. The analysis outlined in this thesis has found that the Iraqi economy has been excessively dependent on oil revenues. This strategy has been insufficient to meet the requirements for the overall development of the economy. A major reason has been the neglect of integrating the oil sector within the rest of the economy. As a result the significant benefits that could have accrued to the economy from integrating the oil sector more closely with other industries have not been apparent. Therefore this thesis attempts to show that one of the most beneficial approaches for economic development in Iraq would be to stimulate the backward and forward linkages between oil and the other sectors of the economy. The reduction of the heavy dependence on oil revenues, the thesis argues, can only be obtained by developing the other commodity sectors, namely the agricultural and the industrial. These sectors could create another important source of revenues, directly by increasing production and therefore value-added, and indirectly in terms of tax revenues. An examination of the structure of the Iraqi economy suggests that a feasible strategy would be to focus on the development of a petroleum-based fertiliser industry. Analysis of the domestic market for nitrogenous fertiliser has shown than there would be sufficient demand for the product of this industry. By increasing the application of nitrogenous fertiliser to lands presently under cultivation, yields could be significantly improved. In the longer term, it would also be possible to increase the amount of land used for agricultural production. This would obviously enhance rural incomes. As over a third of the population of the country depended on agriculture for income and employment, this strategy would provide an important stimulus to the overall development of the Iraqi economy. Apart from the benefits derived from increasing the backward and forward linkages between oil and the other sectors of the economy, such a strategy would provide favourable conditions for the industrialisation of Iraq. This can be seen in the build-up of a skilled labour-force and technology transformation. To illustrate the benefits of this development strategy, a model was developed to measure the potential savings in terms of foreign exchange. This showed that significant savings could be made by applying domestic nitrogenous fertiliser to the agricultural sector. This is the result of saving on both imports of agricultural products, as a result of increasing domestic agricultural production, and replacing the import of nitrogenous fertiliser with cheaper domestic production.
Economic development, Petrochemical, Industrialisation, Iraq, Agriculture, Nitrogenous fertiliser
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