Using Co-Integration Equations to Study Economic Aspectof Agricultural Development Sector in Saudi Arabia

Abstract

The objective of this study is to measure the development of agricultural sector along with economic factors that responsible for productivity over the period 1985-203. Econometrics method has been applied, particaly unit root tests and co-integration equations such as two stages Engle and Granger (E-G) and Johansen and Juselius (J-J) methods. The results indicate the following findings: 1- The growth of farm income has increased by 3.1% per year over the period of the study, 2- The agricultural sector has achieved low economic development, 3- The change of labor, fixed investment, and agricultural machinery by 10% will cause farm income for each land unit to change by 0.6%, 2.1%, and -0.9% due to E-G method and by 0.5%, 24.4%, and -5.6% due to J-J method ,respectively. 4- The study recommend to evaluate efficiency of agricultural investment and machinery use in order to increase productivity efficiency of agricultural sector, and hence to increase its share in gross national income