Demand Function for Imports of Rice and Its Implications inthe Kingdom of Saudi Arabia

Abstract

The objective of this study is to estimate the demand function for rice imports, and to use the estimated model in deriving some important economic indicators such as price and income elasticities of demand for rice imports and to forecast the quantity of imported rice in the future. A single equation econometric model was specified and statistically estimated in various forms. It was found that the estimated linear model was the best model in representing the demand function for rice. It was concluded that real importing price, real national income and population were the most important factors affecting rice imports of the Kingdom of Saudi Arabia. They explain 86% of the variations in rice imports. Price and income elasticities of demand for rice imports were estimated as -0.35 and 0.49 respectively. The selected estimated demand equation has been used to forecast the projected quantity of rice imports. It is expected according to the results of this study that the quantity office imports will be 513000 tons in 1410 H.