Journal of Law

Previous Issues

Advance Search
Year : From To Vol
Issue Discipline:

Volume :10 Issue : 37 1984      Add To Cart                                                                    Download


Auther : By: Dr. Hashem M. Al-Ali

The principal objective of the study is to identify and measure the relationships between growth rates of actual government expenditures, on one hand, and price level and movements on the other in the Saudi Arabian economy. The study also aims at investigating the behavioral impact of the above-mentioned variables and attempts to analyze inflation as a consequence of actual government spending and the ensuing increase in money supply.

As a developing country, Saudi Arabia always sought economic diversification and the enhancement of industrialization. The tremendous increase in the oil revenues gave a new impetus to accelerated industrialization and meant the allocation of more funds to the governmental budget. The dangers emanating from this situation soon became apparent since government spending could not be converted into real resources needed for industrialization. It takes time to construct complete and operate ports, roads, buildings, airports and all the requirements of infrastructure. Te urging need to achieve a rapid development, has led to inflation, as supply was not able to cope with demand and the market reacts with higher prices.

Two types of government expenditure have been distinguished in this paper, namely: recurrent expenditures; which cover various categories such as salaries, allowances, travel expenses, stationary, furniture, training fees and mainly represent spending on capital goods. Inflation in Saudi Arabia, however, began with the transfer of public funds to the private sector to finance the implementation of budgeted projects. These categories of government spending and their associated monetary supply form therefore have the proper explanatory framework for the monetary aspects of inflation.

An attempt is also made to analyze and quantify the impact of government spending and money supply, on price levels and movements in the Saudi economy. Econometric techniques have been adopted to elucidate the relationships between these variables. They have been empirically applied on the data covering the period from 1968 / 69 to 1978 / 79, which represents the full span of completion of the first, and the second development plans.

The obtained results deserve attention for the objective of approximating them to the planning procedures applied in the Kingdom. The study is concluded with some pertinent recommendations bearing on policies and measures:

  • to curb inflation,
  • to organize government expenditures,
  • to determine its volume and
  • to control money supply.

Journal of Law
Journal of Law

You are Visitor No.


Journal of Law
Journal of Law
Tell your friendsJournal of Law
Journal of Law

Last Updated

Dec 26, 2021

Journal of Law
Journal of Law
Journal of Law

Please enter your email Here to receive our news

Journal of Law