Mohanad Mohammed Sufyan Ghaleb Department of Management, College of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia.
Email: mghaleb@kfu.edu.sa
Nurbek Normuradov Department of Digital Economics, Tashkent State University of Economics, Uzbekistan.
Email: n.normuradov@tsue.uz

Abstract:

Agricultural production becomes an integral factor for economic development and food security. Therefore, the study investigated the effect of foreign aid and foreign agricultural aid on Saudi Arabia's agricultural production. Researchers also tested the moderating effect of country governance. Quantitative longitudinal data was collected from the world development indicators for the period of 2013 to 2024. The feasible Generalized Least Squares (FGLS) regression technique was used to address econometric concerns such as heteroskedasticity, autocorrelation, and cross-sectional dependence. For robustness of findings, Panel-Corrected Standard Errors (PCSE) were also applied. From those regression models, FGLS results were more appropriate. FGLS results show the significant impact of total foreign aid and total agricultural aid on the agricultural production of Saudi Arabia. Country governance also significantly moderates among total foreign aid, foreign agricultural aid, and agricultural production of Saudi Arabia. These findings highlighted that an effective governance structure improves the efficiency of aid utilization which is ensuring its alignment with national agricultural objectives. The research results highlighted that policymakers must focus on strengthening governance frameworks, enhancing aid allocation efficiency, and ensuring transparency in financial assistance programs to maximize the impact of foreign aid on agricultural production. Private sector stakeholders can leverage foreign aid for technology adoption, infrastructure development, and market expansion. This study is the first to empirically examine the direct and moderating effects of foreign aid and foreign agricultural aid on agricultural production in Saudi Arabia. This study also contributes to both agricultural economics and governance literature which offers novel insights into how governance improves the foreign aid in the country.

Keywords:Foreign aid, Agricultural production, Country governance, Saudi Arabia.