A significant breakthrough in the Iranian economy and its foreign trade came only after the increase in oil prices during 1974. Thereafter, with the rising exports of crude oil & gas, the total imports of Iran also increased rapidly. Imports of Food & Live Animals during 1977-78 accounted for 10.52%( 1486 million) of total imports ($ 14124 million).
This study aims at analysing impact of import prices of agricultural goods, prices .of domestically produced substitutes, domestic production of substitutes and the real GNP on the import demand for eleven agricultural cormmodities. They are Red Meat; Dead Poultry; Milk; Eggs; Tea; Wheat & Meslin; Rice; Oil-seeds & Oleaginous Fruits;Sugar; Tobacco; and Cotton. The import demand model of the following type for seventeen years’data was used and the results were analysed on IBM 370 computer in the University of Tehran:
LogQ mi = ?0+ ? 1logP mi + ?2 log DPst + ?3 log Yr
where Qmi, Pmi,DPst and Yr are the indices for quantity imported, import prices, domestic production of substitutes and real GNP, respectively. For annual crops, index of domestic production lagged by one year, DPst-1 was incorporated in the model.
Import prices for meat, poultry, eggs, tobacco and cotton showed higher elasticities of demand. In case of wheat and cotton, domestic production influeenced the import demand considerably. Similarly, for red meat, poultry and tobacco,
the domestic prices exerted pressure on the demand for imports. Real income variable influenced positively the demand for imports of red meat, poultry, tobacco, eggs, sugar and high quality cotton. Most of the results were in confirmation to the economic theory and various statistical tests showed the different levels of their significance. This study, first of its kind in Iran, helps in understanding previous import policies and provide basis for more economical agricultural imports.
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