Actual and Desired Agricultural Government Investment in Saudi Arabia

The Kingdom of Saudi Arabia has applied an agricultural support program as one of the agricultural policy tools. The agricultural support program has been implemented in order to economically direct labor and capital resources, accelerate agricultural development, and finally diversify national income sources. The agricultural government support includes; input- output production and government services programs. Agricultural support program has increased from 50.42% in 1979 to 84.37% in 1988 out of total government support program. Inspite of, decreasing the agricultural government support, however, agricultural sector still has 60.53% out of the government support over the period 1979-1999. The purpose of this study is to introduce the comparative variance of actual and desired level of agricultural government investment over the period 1985-1998.The study relies on the econometric analysis approach to accomplish its objective, such as, average percentage deviation method and partial adjustment model which is considered as a dynamic long-run model. The most important results are as follows: 1) Agricultural subsidy and loan values have yearly declined over the period of the study by 8.6% and 4.5% respectively. Consequently, direct agricultural government investment has also annuelly declined by 7.6% over the same period of time. 2) Agricultural government investment and subsidy values were more stable than agricultural loans value. This was due to the high value of non-stability coefficient of agricultural loans (18.11) over the period of study. 3) Actual level of agricultural government overcome the desired level during most of study years. The average of actual agricultural government investment value was 4792.54 million Riyal, whereas the desired was 3080.79 million Riyal. Thus, the actual agricultural government investment has come to 155.6% compared to desired level over the period of study. 4) The desired agricultural government investment is anticipated to decrease from 5.4 billion Riyal in 2002 to about 4.1 billion Riyal in 2005. The average decrease is expected to be 4.73 billion Riyal during the period 2002-2005. 5) The direct support policy plans for agricultural sector should be made within the desired agricultural investment in order to limit unutilized agricultural capital