Income circular flow and its impact on sustainable agricultural productivity

This study empirically investigates the pivotal role of the institutional sectors’ disposable income in shaping economic productivity, explicitly focusing on agricultural productivity within Saudi Arabia. Utilizing a social accounting matrix as a data framework, we employ an extended multisector model that integrates income generation and distribution with production structures. Through dispersion analysis, we meticulously explore production sectors' forward and backward linkages within the broader economic system. Our findings reveal that while the agriculture sector exhibits strong backward linkages, its forward linkages remain comparatively weaker in both exogenous and endogenous setups. Moreover, including the income-expenditure phenomenon significantly alters the structural links of several other sectors. The current study provides valuable insights into integrating income-expenditure dynamics within production structures, explicitly focusing on institutional sectors. Notably, the incorporation of the income-expenditure phenomenon emerges as a transformative factor, influencing the structural interconnections of numerous other sectors. The findings highlight the pivotal role of the agriculture sector in shaping broader economic relationships and emphasize the need for nuanced policy considerations to optimize the overall economic structure.