The paradox of oil and development

Dissertation for receiving the degree of Master of Arts (M.A)

Treatment:

Energy Economics

Chapter One:

Research Overview

Introduction

Revenues from the sale of oil in oil exporting countries play a major role in increasing prosperity and public welfare of these countries. These revenues are considered part of the national income of these countries and can be exchanged with foreign capital and currency, and the currency of the purchased agents can be used in the way of economic development. Iran is also considered as one of the richest oil producing countries in the world. Iran's national economy is highly dependent on crude oil exports, and the vulnerability of the country's economy to oil revenues is very high. In fact, this variable has greatly affected the performance and efficiency of the entire Iranian economy. The ownership of Iran's oil and gas resources, as well as all related and related industries, belongs to the government. Therefore, the income from oil export is considered as a supplier of a large part of the public budget. Any unexpected decrease in oil income can directly affect the government budget, and the lack of correct economic policies can lead to economic crisis and imbalances. In the first part of this chapter, the importance of oil and oil income is mentioned, then the effects of oil income fluctuations on Iran's economy are explained. In the following, the question was raised whether the growth of oil revenues had a positive and significant effect on promoting economic development. Then, the necessity and importance of the subject under study has been discussed. Next, the main objectives of the research, questions, research hypotheses and the definition of basic concepts have been discussed. Finally, the statistical population, research methodology and the most important limitations of the research are stated. The economic effects of the sudden rise in oil prices after 1973 on  The economy of oil exporting countries has been somewhat complicated. During this period, the revenues from the sale of oil increased sharply, in the same way, it caused the growth of the price level, wage rates and imports in most of the crude oil exporting countries. Most importantly, the growth of the oil sector as an effective factor in national income leads to an increase in total demand and thus leads to an increase in prices and profitability in the non-tradable sector of most single-product economies. This phenomenon is known as "Dutch disease"[1] in economic literature. The result of the Dutch disease in oil exporting countries is a significant increase in the share of the oil sector in the national income compared to non-oil sectors. In this situation, the increase in per capita income is only due to the increase in oil income, and this phenomenon can be seen even in diverse and relatively large economies like Iran (Al Abbasi 1991). Therefore, in order to prevent economic crises and design appropriate economic policies in order to maintain economic balance and stability, it is necessary to examine the effects of changes in global oil prices on Iran's macroeconomic variables. Also, the formulation of socio-economic development programs and the setting of the country's annual budgets require knowing and making accurate forecasts of the impact of oil price fluctuations on macro-economic variables, so that planners can minimize their impact on macro-variables when oil shocks occur and adopt correct policies.

On the other hand, it should be noted that the concepts "Development" and "underdevelopment" It is one of the most important and central categories that have occupied the minds of most elites of the society. The concepts of development, progress, progress and such terms have multiple meanings and in different cultures, they have been interpreted differently and there is no consensus in their definition. "Guy Roche"  Without distinguishing between development and modernization, he considers it as "all the actions that are carried out in order to lead a society towards the realization of a regular set of collective and individual life conditions, and are recognized as desirable in relation to some values.» In another definition, "Development in a comprehensive sense is a complex process that includes the quantitative and qualitative growth of products and services, the evolution of the quality of life and the social fabric of society, the adjustment of incomes, the elimination of poverty and deprivation and unemployment, the provision of universal welfare and endogenous scientific and technological growth in a given society". So  " Development & raquo; It includes all the cultural, social, political and economic aspects of society.

It can be said that the concept of "development" is It is necessarily a value judgment that is related to certain values. The economist examines and observes this value in increasing the standard of living with numbers and digits, while for the sociologist this desire is related to an order of functional values. However, not all human societies value raising the standard of living in the same way and do not attach the same importance to this matter. The history of development discussions is related to after World War II, when the nations of the world were divided into developed, developing and underdeveloped nations and were studied by economists and sociologists. In the first type, development is considered an economic reality and mainly the concepts of economics are used. In these theories, the definition of "rapid and continuous increase in national production", "income growth per capita", technological development and progress, "accumulation of capital" It is possible and its realization depends on industrialization, but with the expansion of the conceptual space of development, this concept changed from a purely economic reality to a reality with different political, social and cultural dimensions, it became the subject of sociological analysis and showed that development is an all-round change and the development paths of different types of societies are different. However, despite the relative agreement of most scientists in the field of the concept of development, there is no agreement among them about the causes of the backwardness of some societies and the ways to achieve development and get out of the crisis. The formation of various concepts in the form of "double development" Such as "cultural development", "political development", "social development", "economic development", "sustainable development", and "endogenous development". and "human development" It tells about this. In short, in response to the question, why do some societies develop later than others? A category called "obstacles to development" Both internally and externally, theories about development were proposed as a historical fact.

What is certain is that the ultimate goal of every society is to try to achieve growth and development. Development means the continuous improvement of the entire society and social system towards a better and more humane life if we consider the realization of national development as the ultimate goal of development in the country. We can better understand the concept of development, and to identify its requirements, the division and separation of the four economic, social, cultural and political areas will make the work more accurate. Or not?

According to the above, the basic question of the current research is:

Has the growth of oil revenues had a positive and significant effect on promoting the economic development of Iran? It means growth along with the increase of production capacities, including physical, human and social capacities. In economic development, a small increase in production is achieved, but along with that, social institutions are also transformed, attitudes change, the ability to exploit existing resources increases continuously and dynamically, and new innovations will be made every day. Also, the composition of production and the relative share of inputs also changes in the production process. Development is an all-encompassing thing in society and cannot happen only in a part of it. Therefore, development does not have a specific limit, border and ceiling, but because of its dependence on humans, it is a qualitative phenomenon and has no limits. In other words, economic development has two main goals: a) increasing the wealth and welfare of the people of society and eradicating poverty; b) Creating employment.