An econometric analysis of the import demand for meat in Saudi Arabia

Demand for meat in Saudi Arabia increased dramatically during the last two decades which lead the government to promote economic development and increased self-sufficiency in meat commodities. This study represents a dynamic specification of the Almost Ideal Demand System (AIDS) based on recent developments on cointegration techniques and error correction models, based on meat and fish consumption data in Saudi Arabia over the period 1981 to 2000. The results show that there is evidence of long-run relationship between expenditure on meat with commodity prices and total meat expenditure. Also, the results for all budget shares elasticities indicate that the demand of poultry and fish, in both the short and long-rum are price inelastic. While the demand for beef and lamb in the short-run was price inelastic, in the long-run these were found to have unit elasticity. The magnitude of short and long-run cross-price elasticities indicates that lamb is a substitute for all meat items, Beef is a substitute for fish only. Poultry is a substitute for lamb and beef, while fish is a substitute for lamb only. In addition, poultry is a complement for fish, while fish is a complement for beef and poultry, beef is a complement for lamb and poultry. The short and long run expenditure elasticities indicate that beef, lamb and poultry were found to have a short run elasticity of less than one. In the long run beef, lamb and poultry, exhibited similar behaviour with regard to expenditure changes, indicating that these three meat items can be considered as necessities. On the other hand, fish is found in the short run and the long run to behave as a luxury good.