Use this URL to cite or link to this record in EThOS:
Title: Resource depletion and investement strategies for oil-based developing economy : An optimal control approach with application to the Iranian economy.
Author: Aghazadeh, E.
Awarding Body: University of Sussex
Current Institution: University of Sussex
Date of Award: 1984
Availability of Full Text:
Access through EThOS:
This thesis examines the planning strategies open to the dual economy of an oil-producing country that desires to link the export of its valuable exhaustible resource to the requirements of a balanced development of the non-oil sectors of the economy so that the benefits of oil survive its eventual exhaustion while attaining. the highest possible standard of living over time. A planning model is developed to deal with these long-run problems. The application of optimal control theory for the optimal choice over time shows how the economy can be guided from its initial state towards a more desirable target state. The solutions to the planning problem are obtained in the form of possible depletion-investment strategies that a resource-based dual economy could adopt to achieve this end. They are then put to test using the Iranian economy as an example. From the analytical solution also emerges an iterative process to be used for the numerical application. The similarities of OPEC-type economies form the basis and their peculiarities correspond to different magnitudes in the parameters of the model. The estimation of the sectoral production functions and the oil demand curve facing Iran as an individual OPEC producer provides a numerical base necessary for the empirical application of the model. It covers the oil price shocks of the 1970s and the economic background of the 1977/78 upheaval culminating in the 1979 revolution. The planning period (1971-2000) enables a comparison of the optimal policies suggested by the model solutions with those practiced by Iran during the 1970s. Results reveal that the latter policies were far from those leading the economy along a balanced growth path. The policies implemented after the oil boom 1973/74 intensified the imbalances and tensions inherent in the pattern of an uneven development and led to the 1979 revolution. The model solutions show how these imbalances could have been corrected and the same level of revenue could have been obtained for lower oil exports. The remedy sought for the planning problem does not necessarily advocate preservation of the exhaustible resource or restoration of equity at the cost of growth, but emphasizes the importance of having a long-term depletion policy and linking it with a balanced development strategy as a safeguard against the balance tilting in favour of the present generation or the modern sector. The ,model is universally adaptable and could be applied to any economy dependent on a single exhaustible resource - oil or otherwise.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Economics & economic theory