A policy implication of the study suggests that for the future, Iran must give primary emphasis to stimulating both agricultural production and productivity in order to stimulate its economic development.

This study provides an estimate of the direct economic effects of the American wheat aid program under Public Law 480 on Iran's domestic wheat production for the period of 1958 - 1973.

The findings of this study suggest that wheat aid did not have a serious dampening effect on domestic wheat production in Iran for the simple reason that it has constituted only a small fraction of domestic food consumption. The domestic supply of wheat appeared to be responsive to price changes, but not strongly, i.e., the price elasticity of supply was positive but low--about 0.12.

To accomplish the above objective, an econometric food aid model was developed and used to measure the effect on domestic production of a change in the amount of wheat availability caused by a change in P.L. 480 shipments. Specifically the model measured the elasticity of production response with respect to P.L. 480 imports with a one year response lag. The coefficient of the elasticity was determined to be 0.28 which means that domestic wheat production would change about 0.28 percent for each one percent change in P.L. 480's contribution to the wheat utilization in Iran.

The estimation of any production impacts resulting from P.L. 480 wheat shipments rests heavily on the measurement of price changes and related production responses. Thus, the major effort of the study was devoted to determining the effect on the domestic price of wheat in the recipient country due to an increase in the wheat availability made up by P.L. 480 wheat imports.