Elasticities of Food Import Demand in Arab Countries: Implications for Food Security and Policy

Abstract

Rising population, combined with declining home food production, in Arab nations has resulted in increased food imports that intensifies their dependence on international markets for vital food supplies. These nations face challenges in achieving food security because crude oil price volatility creates difficulties in managing the expenses of imported food products. This research calculates the income and price elasticities of imported food demand to understand consumer behavior changes in response to income and price variations, which helps to explain their impact on regional food security. To our knowledge, this research presents the first analysis of imported food consumption patterns across Arab countries according to their income brackets. This study employs the static Almost Ideal Demand System model to examine food import data spanning from 1961 to 2020. The majority of imported food categories demonstrate inelastic price and income demand, which means that their essential food consumption remains stable despite cost fluctuations. The need for imports makes Arab nations vulnerable to external price changes, which endangers their food security. This research demonstrates why governments must implement policies through subsidies and taxation to reduce price volatility risks while ensuring food stability, which will lead to sustained food security for these nations.

1. Introduction

The Arab world consists of two distinct types of countries: the small island nations located in the Middle East, and the large states found in Northern Africa. These countries share cultural and linguistic connections and regional organizations which work to achieve common objectives. The League of Arab States (LAS) was founded to build economic, cultural, social, and health partnerships between its member states so that they can address regional problems together. The Organization of Arab Petroleum Exporting Countries (OAPEC) exists to promote international cooperation in petroleum industry operations, which are vital to numerous Arab nations’ economies. The Gulf Cooperation Council (GCC) works to create economic and financial integration among its member states through its efforts to develop multiple interdomain connections. The member countries of these key organizations appear in

Table A1. Organization membership of the Arab world countries and territories.

Organization	Founded	Members
LAS	1945	Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, the United Arab Emirates, and Yemen.
OAPEC	1968	Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
GCC	1981	Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

in Appendix A, which demonstrates how regional cooperation in the Arab world develops through common membership and united objectives. The organizations, established primarily for economic and political alliance development, possess unexplored capabilities to address the critical food security issue affecting the region. The Arab nations face food import dependency because their land is limited, water resources are scarce, and their climate restricts agricultural output at home. Their growing populations, together with increasing market requirements, have made their dependency on imports even more severe. The food supply systems in the region have become more vulnerable because of both international commodity market and oil market fluctuations, especially when crude oil prices change, because they impact national revenues and import expenses. While the present study examines the economic factors influencing food import demand, it is crucial to acknowledge that environmental constraints—especially water scarcity and the broader water–food–energy nexus—play a vital role in determining food security in the Arab region. Although these issues fall outside the scope of our empirical analysis, we identify them as key areas for future interdisciplinary research and policy development.

Analysis of food demand responses to income and price changes in Arab countries enables policymakers to create effective food security protection measures. The existing economic cooperation between regional organizations should expand to include food import strategy coordination and market integration enhancement and joint policy development for external shock reduction. The recent food security crises across parts of the Arab world have prompted certain nations to establish economic partnerships and trade agreements with major global powers, including the European Union, the United States, and China. The region faces ongoing food security challenges because global food prices continue to fluctuate, and supply chain disruptions occur regularly. The World Bank’s Food Security Update Report indicates that several Arab nations experience severe food insecurity because of climate change effects and economic instability [1]. It reports that food security in some Arab nations remains alarming because of climate change and economic turmoil. The World Trade Organization identifies Comoros, Djibouti, Mauritania, Somalia, Sudan, and Yemen as net-food-importing developing countries (NFIDCs) together with Egypt, Jordan, Morocco, and Tunisia [2]. Trade policies in these nations determine food production levels and consumption patterns and access to food, which affects their overall food security [3]. As population growth accelerates and climate change continues to degrade agricultural capacity, the Arab region’s dependence on food imports is projected to rise significantly. The gap between domestic consumption and production of animal products, dairy products, oils, and cereals is quite significant in the Arab region, where 65% of its consumption of cereals was imported between 2014 and 2016 [4]. To meet food self-sufficiency, it is expected that Arab countries would be dependent on oilseeds and vegetable oils the most in the coming years, where the self-sufficiency ratios of these products are expected to be lower than 20% in this region [4]. Economies dealing with severe food insecurity use importation as their main approach to expand their food sources while lowering home prices and maintaining consistent food availability. The heavy dependence of Arab countries on food imports makes them vulnerable to price fluctuations in the global market. The reduction in food waste, together with agricultural production growth, helps decrease the need for imported food [5].

The Arab world dedicates its agricultural sector mainly to export activities rather than domestic food manufacturing because it lacks sufficient agricultural land and faces water scarcity issues. The Arab world maintained intraregional agro-food trade above 50% during previous years [6], yet intraregional trade reached only 12% in 2018 [7]. The agricultural sector’s share of GDP in the entire region decreased from 7.3% in 2000 to 4.4% in 2022 [1]. The Syrian Arab Republic leads the Arab world with a 43.1% contribution of agriculture to GDP in 2022, while Bahrain shows the lowest value at 0.2%. The region’s food import dependency has grown because of rising population numbers and climate change effects [8]. The Arab region experienced a 2.5 percent increase in cereal production from 2012 to 2021, yet its output remained 20.1 percent below global average growth [9]. The 18.4% rise in fruit production matched the worldwide average increase.

The FAO import data from 1961 to 2020 shows positive trends in food imports across different product categories in Arab countries. The quantity of food imports by Arab countries shows a rising trend across all food categories according to Figure 1, Figure 2 and Figure 3. The import quantities of staples experienced a significant increase in all Arab countries, while high-income Arab countries saw substantial growth in imported fruits and vegetables throughout the study period.

This research investigates how Arab nations import food through analyzing agricultural food import patterns, together with demand parameter estimation, by using databases between 1961 and 2020 [10]. Several studies have analyzed food import demand in the Arab world, but research on product-specific demands remains limited. This research explores food import behavior by investigating how income and commodity prices influence consumption in the region. This research’s outcomes will benefit both countries that import food, along with their trading partners. This study extends knowledge about agricultural food import demand for Arab nations through the application of the Almost Ideal Demand System (AIDS) model across major agricultural product groups. This research demonstrates the influence of import policies on food import behaviors while identifying their importance for strengthening food security. The definition of food security as consistent access to sufficient nutritious food remains important for Arab nations, since they heavily depend on importing food. This research demonstrates that strategic import policies can strengthen food security through the mitigation of price instability and supply breakdowns. Studying food imports in the Arab region is crucial because it directly impacts the achievement of the United Nations’ Sustainable Development Goals (SDG 2) Zero Hunger goal, which aims to end hunger while securing food availability and nutritional quality and promoting sustainable agriculture. This research study aligns with the United Nations’ Sustainable Development Goals (SDG 2) Zero Hunger initiative because it supports the goals to eliminate hunger and ensure food security alongside improving nutrition and sustainable agricultural practices. This study is structured as follows: An overview of empirical research about import dynamics within the literature comes first. The following sections present the data description, followed by an explanation of the AIDS model, and then proceeding to show estimated results. A summary then follows, before this research concludes with policy recommendations.

2. Literature Review

Research on food import demand exists in enormous quantities at both national and subnational levels across Arab-world countries. Research studies mainly analyze particular food products and national market trends through econometric modeling to determine demand elasticity. Chomo et al. [11] analyzed imported meat and dairy products and eggs and live animals in Oman from 1981 to 1996 through linear demand function estimation. The study found dairy and egg imports to be price-inelastic, which indicates revenue growth potential, while both dairy and meat products showed normal good characteristics. Awad et al. [12] applied the Autoregressive Distributed Lag method to study Middle-Eastern and North-African palm oil import demand. The research showed that imported palm oil demand responded strongly to palm oil price variations together with the national income levels of the studied countries. The authors Aljebrin and Ibrahim [13] employed a panel Seemingly Unrelated Regression model to study GCC import demand determinants from 1994 to 2008. The study found that import demand had a negative relationship with the relative price of imports compared to local prices during the long term. The research established a positive relationship between import demand and real country income throughout both short-term and long-term periods. Al-Mahish et al. [14] analyzed the milk market in Bahrain from 2000 to 2016 using the error-corrected LA-AIDS model. Imported milk, considered a complement to domestic dairy, is viewed as both a normal good and a luxury product in Bahrain. The demand for imported milk is inelastic in the short run, but becomes price-elastic eventually. However, an increase in the price of alfalfa hay boosts milk imports.

The research by Alnafissa and Alderiny [15] analyzed the market demand for imported natural honey from Yemen, Mexico, and Australia through the AIDS model from 1991 to 2017. The estimated expenditure elasticities showed that imported honeys from Yemen and Mexico are considered luxuries. The uncompensated elasticities showed that Yemeni honey has the lowest own-price sensitivity, while Australian honey has the highest. The research recommended boosting domestic natural honey production to fulfill the increasing market requirements for this product. Gani [16] analyzed the main determinants of live animal imports into GCC countries through the gravity model framework from 2004 to 2017. The research shows that live animal imports increase when importing nations expand their economic size and improve their global shipping connections and importing countries display cultural preferences and lower their live cattle import tariffs and sheep import business costs. The indifference of importers to their source countries leads to the preference of aggregation across imported commodities, since no additional information is gained by product disaggregation [17].

Research on food import patterns conducted within national frameworks provides detailed knowledge about commodity-level and source-based analytical methods. Kaitibie et al. [18] applied the Restricted Source-Differentiated AIDS model to study food import substitution elasticities in Qatar between 2004 and 2017. The research showed that Qatar could preserve its food imports from India, Australia, and the Netherlands to maintain food security. The AIDS model analysis by Abdullah and Mohammed [19] evaluated the demand elasticities of imported food categories in Iraq during two time periods: 1980–2003 and 2003–2020. The researchers determined that staples functioned as necessities, yet classified all other food products as luxuries. The price elasticity of staples and fruits and vegetables remained low because they showed minimal response to price changes, yet vegetable oils and fats demonstrated the highest price sensitivity through negative demand reactions to staple price fluctuations.

The country-specific research provides useful empirical findings, yet they have a shared drawback of limited geographic or commodity analysis scope. The author has found no existing research which investigates imported food category demand patterns throughout the Arab region while accounting for differences between nations based on their income levels. The absence of research about this topic is crucial because the Arab states have rising dependence on global food markets, together with increasing price volatility and diverse economic profiles.

While previous research, such as [19] and [16], has provided valuable insights into food import demand in specific countries or for particular commodities, our study is distinct in several ways, offering a comprehensive and comparative perspective not previously addressed in the literature. First, our study differs in scope and coverage of the study area. Our analysis is the first to encompass the entire Arab region, rather than focusing on a single country or subgroup. Second, we differentiate countries by income level, analyzing food import demand patterns within these diverse groups, which allows for a nuanced understanding of heterogeneity in the region. Third, we conduct a multi-category analysis of imported food. Unlike studies that examine a single commodity or sector, our work estimates demand elasticities for multiple major food categories, capturing broader consumption and import trends.

This research benefits from several studies conducted outside the Arab region which provide useful comparative insights. Walters and Jones [20] analyzed food import demand in the Caribbean from 1961 to 2009 using the Central Bureau of Statistics differential demand system and discovered price-inelastic demand across five food categories. Asaana and Sakyi [21] used an imperfect substitute demand model to study sub-Saharan African countries from 1990 to 2016 and found that relative import prices strongly influenced demand.

This research contributes to existing literature through its analysis of food import demand across different income levels in Arab countries. This study uses the Almost Ideal Demand System (AIDS) model to analyze long-term import data, which reveals current information about regional food security risks and external price shock mitigation policies.

3. Materials and Methods

3.1. Almost Ideal Demand System Model

Studies utilize various models and estimation methodologies for food demand functions. These include the Rotterdam model [22,23] and the AIDS model [24,25,26]. According to relevant research, the AIDS model surpasses the Rotterdam model in terms of accurately recovering the actual consumer demand elasticities [27,28] by allowing for aggregation across goods, providing direct estimates of expenditure and price elasticities, and imposing fewer restrictions on substitution patterns. The AIDS model, which is proposed by Deaton and Muellbauer [29], is widely used in demand analysis, including the estimation of demand elasticities for imported commodities [30,31,32,33,34,35].

The AIDS model is used in this study to estimate demand elasticities for five imported food categories—staples, meats, dairy, fruits and vegetables, and oils and fats—across a panel of Arab countries from 1961 to 2020, differentiated by income level. It is crucial to acknowledge that the majority of imported foods are reasonably final goods that are dispensed to consumers in their obtained form, which means that using the AIDS model is adequate [36].

Following Deaton and Muellbauer [29], the AIDS model for imported agricultural commodities in Arab countries can be written as follows:

$$W_{it}={\alpha }_i+\sum _{j=1}^N{\gamma }_{ij}\ln p_{jt}+{\beta }_i\ln \left({\displaystyle \frac{X_t}{P_t}}\right)+u_{it}$$

(1)

where $W_{it}$ is the budget share of the $i$-th imported commodity, calculated by dividing the total import expenditure of all imported commodities by the import expenditure of the $i$-th commodity group; $p_{jt}$ is the price of the $j$-th imported commodity; $X_t$ is total food import expenditure; ${\alpha }_i$, ${\beta }_i$, and ${\gamma }_{ij}$ are the parameters to be estimated; and $u_{it}$ is the disturbance term. However, $P_t$ is a stone price index, and is defined as follows:

$$\ln P_t=\sum _{i=1}^N{w}_{it}\ln p_{it}$$

(2)

To ensure consistency with consumer demand theory, the additivity, homogeneity, and symmetry restrictions are imposed, respectively:

$$\mathrm{A}\mathrm{d}\mathrm{d}\mathrm{i}\mathrm{t}\mathrm{i}\mathrm{v}\mathrm{i}\mathrm{t}\mathrm{y}:\sum _{i=1}^N{\alpha }_i=1,\sum _{i=1}^N{\beta }_i=0,\sum _{i=1}^N{\gamma }_{ij}=0$$

(3)

$$\mathrm{H}\mathrm{o}\mathrm{m}\mathrm{o}\mathrm{g}\mathrm{e}\mathrm{n}\mathrm{e}\mathrm{i}\mathrm{t}\mathrm{y}:\sum _{j=1}^N{\gamma }_{ij}=0$$

(4)

$$\mathrm{S}\mathrm{y}\mathrm{m}\mathrm{m}\mathrm{e}\mathrm{t}\mathrm{r}\mathrm{y}:{\gamma }_{ij}={\gamma }_{ji} \mathrm{f}\mathrm{o}\mathrm{r} i,j=1,2,3,4,5 \mathrm{a}\mathrm{n}\mathrm{d} i\ne j$$

(5)

The subsistence consumption of product $i$, which is denoted by ${\alpha }_i$, represents the estimated budget share of product $i$ when prices and expenditures are zero. The expenditure coefficients, which are denoted by ${\beta }_i$, represent the change in expenditure share of product $i$ in regard to changes in income, holding everything else constant. Product $i$ is treated as a luxury good if ${\beta }_i>0$, while it is considered a necessity good if ${\beta }_i<0$. The price coefficients, which are denoted by ${\gamma }_{ij}$, represent the change in the budget share of product $i$ in regard to a percentage change in the price of product $j$, holding expenditures constant. Products $i$ and $j$ are treated as substitutes if ${\gamma }_{ij}>0$, while they are considered complements if ${\gamma }_{ij}<0$. Since the budget shares must add up to one, the added-up restriction is implicitly applied. To avoid singularity of the variance co-variance matrix, one share equation is excluded from the estimating process, and the parameters of the excluded share equation are retrieved using the adding-up constraint. Restrictions on homogeneity and symmetry are applied during estimation.

The estimated parameters of Equation $\left(1\right)$ enable the derivation of the expenditure, uncompensated (Marshallian) own-price, and cross-price elasticities of demand, respectively:

$$e_i=1+{\displaystyle \frac{{\beta }_i}{w_{it}}}$$

(6)

$${\epsilon }_{ii}={\displaystyle \frac{{\gamma }_{ii}}{W_{it}}}-{\beta }_i-1$$

(7)

$${\epsilon }_{ij}={\displaystyle \frac{{\gamma }_{ij}}{W_{it}}}-{\beta }_i{\displaystyle \frac{W_{jt}}{W_{it}}}$$

(8)

The magnitude and sign of income elasticity parameters reveal the fundamental characteristics of the commodity in question. A product’s classification as normal and necessary depends on positive income elasticity values below one, while it becomes normal and luxury when these values exceed one. The normal product category indicates that higher incomes will lead to increased demand in both cases. A product classification of inferior occurs when the predicted income elasticity shows a negative value. The demand for poor goods decreases when consumers receive higher income levels.

The law of demand shows that the quantity demanded of a commodity decreases when its price rises, so a negative sign should result from the calculated own-price elasticity of demand. The price sensitivity of consumers for a specific product becomes measurable through the absolute value of the estimated elasticity. The quantity demanded shows extreme sensitivity to price changes when the estimated own-price elasticity exceeds one, which classifies demand as elastic. Products with estimated own-price elasticity values below one demonstrate inelastic demand because their demanded quantity shows reduced sensitivity to price changes.

Estimating Equations (6) and (8) allows for the derivation of the compensated (Hicksian) price elasticities of demand using the Slutsky equation, as given in Equation (9):

$$h_{ij}={\epsilon }_{ij}+e_i{W}_{jt}$$

(9)

The responsiveness of the quantity demanded to variations in a commodity’s price is measured explicitly by compensated elasticity. Compensated or Hicksian elasticities provide a better assessment of substitutability among commodities because they focus solely on the substitution effect. The cross-price elasticity of demand measures the relationship between the quantity demanded of one product and the price change of another related product. Two products are considered substitutes when the estimated cross-price elasticity is positive, indicating that an increase in the price of one product will lead to an increase in the demand for the other. In contrast, two products are viewed as complements when the estimated cross-price elasticity is negative, implying that an increase in the price of one product will result in a decrease in demand for the other, since they are typically consumed together.

As highlighted by Poi [37], the additivity restriction in the AIDS model causes a singularity. To address this issue, one equation from the demand system should be dropped, and the remaining equations should be estimated. To obtain the expenditure, uncompensated price, and compensated price elasticities of the residual category, the adding-up restrictions can be used. In this study, the import share of staples was dropped from the demand system, and their related elasticities were obtained later. The researchers omitted staples because these products maintain the largest and most consistent budget allocation throughout different income levels and time periods, thus reducing potential errors from removing a single equation from the system. The selection of staples for exclusion enables a better elasticity estimation for other categories because their consumption patterns show more variability. This research applies the AIDS model to determine how imported food demand patterns change based on income levels within Arab nations. The model delivers dependable results through its key restrictions, which reveal differences in consumption patterns between various income groups. The following section describes the data acquisition process and elasticity calculation methods.

3.2. Data

The data from five aggregated food categories are utilized in this analysis. The first category is animal products, which consist of all fresh or frozen meats from cattle, chicken, duck, game, goat, horse, pig, rabbit, sheep, and turkey. The second category, dairy products, includes all types of dairy products, such as milk, cheese, butter, and eggs. The third category encompasses fruits and vegetables, covering all forms of fruits and vegetables: dried, fresh, or frozen. The oils category consists of various oils, including those derived from olives and other vegetables. The final category, staples, includes dry beans, chickpeas, potatoes, rice, sweet corn, and wheat.

Our choice of product groups was guided by several considerations. First, we aimed to ensure consistency with previous regional studies (e.g., [19] and [13]), which commonly analyzed broad food categories—such as staples, dairy, oils, and fruits and vegetables—to facilitate comparability and relevance to policy. Second, the FAO import data for the Arab region are most complete and reliable at these aggregate levels, while more detailed disaggregation often leads to significant data gaps or inconsistencies across countries and years. Third, as noted by Asche, Bremnes, and Wessells [17], aggregation is sometimes preferred in international demand studies when disaggregation does not provide substantially more information, especially in contexts where consumer preferences and trade policies are shaped at the group rather than the individual commodity level.

Annual import quantities and expenditures for all countries in the Arab world from 1961 to 2020 were sourced from the Food and Agriculture Organization (FAO) of the United Nations. All import quantities are measured in thousands of tons, and all import expenditures are represented in millions of U.S. dollars. The import price (USD/tonne) for each food category was calculated by dividing the import expenditure for that category by its import quantity. Similarly, the budget share for each category was determined by dividing the total quantity in the commodity group by the total expenditure on all imported commodities.

The World Bank [38] classifies countries into various categories based on income. The low-income category includes Sudan, the Syrian Arab Republic, and Yemen. The lower-middle-income category comprises Algeria, Comoros, Djibouti, Egypt, Mauritania, Morocco, Somalia, and Tunisia, while the upper-middle-income category includes Iraq, Jordan, Lebanon, and Libya. Finally, the high-income category encompasses Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the United Arab Emirates. Since consumer sensitivity to the price of imported food products is not expected to be uniform across these countries, aggregating data will not yield unbiased coefficient estimates. Therefore, to obtain valid estimations, demand elasticities are calculated for countries categorized by income, specifically low-income, middle-income, and high-income Arab countries.

Table 1. Descriptive statistics of the Arab countries’ food imports.

	Low-Income	Middle-Income	High-Income
	Countries	Countries	Countries
Commodity Group	Mean (Standard Deviation)	Mean (Standard Deviation)	Mean (Standard Deviation)
Annual Quantity (1000 tonne)
Animal Products	50.57 (47.44)	245.4 (230.05)	704.38 (653.82)
Dairy Products	81.56 (54.34)	755.61 (527.24)	668 (679.04)
Fruits and vegetables	328.41 (258.35)	1403.73 (1648.5)	3220.45 (2617.1)
Oils	240.29 (229.32)	2189.01 (1636.36)	672.28 (675.76)
Staples	1832.47 (1886.85)	15,442.38 (9548.22)	1828.17 (2049.3)
Annual Expenditure (USD 1,000,000)
Animal Products	73.68 (76.46)	412.78 (422.31)	1335.23 (1537.98)
Dairy Products	177.53 (165.95)	1604.78 (1570.28)	1548.93 (1836.35)
Fruits and vegetables	152.62 (160.92)	955.16 (1339.31)	2051.6 (2304.91)
Oils	190.21 (224.43)	1746.08 (1733.58)	657.16 (789.12)
Staples	418.74 (575.81)	3445.97 (3144.56)	505.94 (667.95)
Annual Price (USD/tonne)
Animal Products	1079.21 (553.68)	1555.44 (642.9)	1505.19 (603.69)
Dairy Products	1390.91 (855.56)	1644.58 (792.81)	1649.45 (739.47)
Fruits and vegetables	374.29 (262.98)	607.15 (305.74)	511.1 (227.98)
Oils	476 (255.82)	713.38 (268.91)	868.07 (342.25)
Staples	163.94 (130.86)	214.58 (89.32)	238.02 (72.91)
Annual Budget Share (%)
Animal Products	6.51 (4.05)	5.26 (3.85)	19.41 (5.67)
Dairy Products	21.64 (5.82)	19.32 (2.92)	25.04 (2.29)
Fruits and vegetables	20.9 (12.13)	9.35 (3.96)	36.23 (4.2)
Oils	16.25 (10.01)	20.89 (4.06)	10.8 (2.96)
Staples	34.68 (12.24)	45.17 (6.26)	8.49 (2.87)

presents the descriptive statistics for the five imported food commodities used in the demand model. Imported dairy products were the most expensive per metric ton on average, followed by imported animal products in all Arab countries. On average, imported staples constituted the least expensive category of imported food for consumers during the study period.

The import prices of dairy products and animal products have been increasing over time compared to the import prices of other food categories, as shown in Figure 4. The import prices of dairy products in low-income countries rose substantially from USD 2874 per metric ton in 2012 to USD 3366 per metric ton in 2015. The import prices of dairy products in middle-income countries experienced major increases between 2005 and 2008, when they rose from USD 2117 per metric ton in 2005 to USD 3208 per metric ton in 2008. Imported dairy products in high-income countries experienced major price increases from 2006 to 2011, when prices rose from USD 1826 per metric ton in 2006 to USD 3019 per metric ton in 2011. All imported commodities show significant price increases since 2005.

Staples maintained the highest average annual import share in low-income and middle-income Arab countries, but fruits and vegetables led high-income Arab countries during the study period. The smallest average annual import share in low-income and middle-income Arab countries belonged to animal products, but staples maintained the smallest import share in high-income Arab countries. The import share of dairy products and fruits and vegetables in low-income countries showed a negative trend throughout the study period. The import share of oils and staples shows a positive trend, but staples experience major fluctuations in their import share. The import share of staples in middle-income countries declined steadily with small variations compared to low-income countries. The import share of animal products in high-income countries showed a positive trend throughout the entire studied period, as shown in Figure 5.

4. Results and Discussion

4.1. Estimated Parameters of the AIDS Demand System

Table 2. Parameter estimates from the AIDS demand system.

Countries	Low-Income		Middle-Income		High-Income
Parameters	Coef.	Std. Err.	Coef.	Std. Err.	Coef.	Std. Err.
${\alpha }_1$	0.128	0.046	0.033	0.070	0.198	0.059
${\alpha }_2$	−0.033	0.087	0.091	0.050	0.236	0.037
${\alpha }_3$	−0.164	0.079	−0.001	0.056	0.294	0.042
${\alpha }_4$	0.373	0.082	0.266	0.063	0.123	0.029
${\alpha }_5$	0.697	0.113	0.611	0.087	0.149	0.041
${\beta }_1$	0.020	0.006	0.000	0.007	0.022	0.005
${\beta }_2$	−0.037	0.010	−0.012	0.005	0.006	0.004
${\beta }_3$	−0.080	0.013	0.014	0.008	−0.037	0.004
${\beta }_4$	0.026	0.012	0.012	0.008	0.008	0.003
${\beta }_5$	1.071	0.017	0.986	0.010	1.001	0.004
${\gamma }_{11}$	0.006	0.010	0.035	0.036	0.059	0.043
${\gamma }_{12}$	0.009	0.013	−0.030	0.019	−0.016	0.022
${\gamma }_{13}$	−0.002	0.009	0.021	0.023	0.037	0.024
${\gamma }_{14}$	−0.004	0.012	−0.007	0.030	−0.015	0.018
${\gamma }_{15}$	−0.007	0.013	−0.019	0.027	−0.065	0.021
${\gamma }_{21}$	0.009	0.013	−0.030	0.019	−0.016	0.022
${\gamma }_{22}$	0.023	0.033	0.062	0.018	0.025	0.020
${\gamma }_{23}$	−0.001	0.016	0.051	0.015	−0.080	0.016
${\gamma }_{24}$	0.023	0.021	−0.036	0.017	0.061	0.011
${\gamma }_{25}$	−0.054	0.023	−0.047	0.020	0.010	0.013
${\gamma }_{31}$	−0.002	0.009	0.021	0.023	0.037	0.024
${\gamma }_{32}$	−0.001	0.016	0.051	0.015	−0.080	0.016
${\gamma }_{33}$	−0.046	0.025	−0.040	0.025	0.223	0.023
${\gamma }_{34}$	0.066	0.021	0.023	0.022	−0.119	0.013
${\gamma }_{35}$	−0.016	0.025	−0.054	0.024	−0.061	0.015
${\gamma }_{41}$	−0.004	0.012	−0.007	0.030	−0.015	0.018
${\gamma }_{42}$	0.023	0.021	−0.036	0.017	0.061	0.011
${\gamma }_{43}$	0.066	0.021	0.023	0.022	−0.119	0.013
${\gamma }_{44}$	−0.166	0.031	0.031	0.038	0.010	0.014
${\gamma }_{45}$	0.082	0.026	−0.011	0.029	0.063	0.010
${\gamma }_{51}$	−0.007	0.013	−0.019	0.027	−0.065	0.021
${\gamma }_{52}$	−0.054	0.023	−0.047	0.020	0.010	0.013
${\gamma }_{53}$	−0.016	0.025	−0.054	0.024	−0.061	0.015
${\gamma }_{54}$	0.082	0.026	−0.011	0.029	0.063	0.010
${\gamma }_{55}$	−0.004	0.043	0.131	0.041	0.053	0.016

Note: Bold indicates significance at the 5% significance level.

shows the theoretically constrained results for the AIDS models. The majority of food categories show statistically significant results at the 5% level, according to the bold values in

Table 3. Income, uncompensated, and compensated own-price elasticities in low-income countries.

Food Group	Income Elasticities	Uncompensated Elasticities	Compensated Elasticities
Animal products	1.306 (0.090)	−0.961 (0.150)	−0.876 (0.150)
Dairy products	0.829 (0.046)	−0.884 (0.150)	−0.704 (0.143)
Fruits and vegetables	0.620 (0.061)	−1.270 (0.108)	−1.140 (0.105)
Oils	1.159 (0.075)	−2.066 (0.182)	−1.877 (0.184)
Staples	4.087 (0.048)	−3.013 (0.198)	−1.596 (0.185)

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

, which represent robust findings. The majority of the estimated parameters show statistical significance in this study. The intercept ($\alpha$) is found to be significant for all food categories in high-income Arab countries, indicating that there is an autonomous import level for these food groups. However, the intercepts for dairy products in low-income countries, and for animal products, dairy products, and fruits and vegetables in middle-income countries, are not statistically significant. This indicates that there are no autonomous import levels for these food categories in those countries.

Building on the importance of income and intercept levels, the relationship between prices and import shares reveals further insights into consumer behavior across different income groups. Specifically, the own-price ($\gamma$) of imported oils negatively affects the import share equation in low-income countries. In middle-income countries, the own-price of imported dairy products and imported staples positively impacts the budget share equation, with the highest impact of price on budget shares being noted for staples. Imported fruits and vegetables, along with imported staples, positively affect the import share equation in high-income countries, with the highest impact of price on budget shares being noted for fruits and vegetables.

Consumer preferences between different income groups are influenced by the effects of income on food imports as well as the price effects. The income parameter estimate ($\beta$) demonstrates significance for every food category in low-income Arab countries and most categories in high-income Arab countries, which shows that these food categories depend on the country’s income level for imports. The positive income coefficients for imported animal products and imported oils show that these two food categories serve as essential items for low-income country consumers. The positive income coefficient for imported staples exceeds one, which indicates this imported food category functions as a luxury product for low-income consumers. The negative estimated income coefficients for imported dairy products and imported fruits and vegetables show that these imported food categories have inferior status for low-income consumers.

Middle-income consumers view imported dairy products as inferior foods, but require imported staples because their income coefficient shows negative values for dairy products and positive values less than one for staples. The estimated income coefficients for imported dairy products and imported oils in high-income countries are positive and less than one, which indicates these two imported food categories are essential for consumers. The estimated income coefficient for imported staples in high-income countries shows a positive value slightly above one, which indicates this food category functions as a luxury product. The imported fruits and vegetables category shows a negative estimated income coefficient, which indicates that these food products have inferior status in high-income countries.

4.2. Estimated Elasticities in Low-Income Arab Countries

As shown in Table 3, all the estimated income elasticities were positive and statistically significant, indicating that all imported food categories can be considered normal food products. Fruits and vegetables were the least responsive food category to changes in income, while staples were the most responsive. This suggests that a 1% increase in the income of consumers in low-income Arab countries is expected to result in a 0.62% and 4.08% increase in the demand for imported fruits, vegetables, and staples, respectively. Since the estimated income elasticities of imported dairy products and fruits and vegetables are less than one, these food categories can be considered normal products, whereas imported animal products, oils, and staples can be classified as luxury products in low-income Arab countries, as their estimated income elasticities are greater than one.

Uncompensated own-price import elasticities of demand in low-income Arab countries are shown in Table 3. All calculated own-price elasticities for imported food categories were found to be negative and statistically significant, as anticipated. Imported dairy products were the least responsive, while imported staples were the most responsive to changes in their own prices, with a 1% increase in prices expected to decrease the quantity demanded by 0.88% for dairy products and 3% for staples. Therefore, imported animal products and dairy products were determined to be price-inelastic, whereas imported fruits and vegetables, oils, and staples were found to be price-elastic in low-income Arab countries.

Table 3 also presents the compensated own-price elasticities for imported food categories in low-income Arab countries. Compared to uncompensated elasticities, compensated elasticities are smaller in magnitude, as the latter isolates the pure substitution effect only. All compensated own-price elasticities are found to be negative and statistically significant. The compensated own-price elasticities for imported animal products and dairy products indicate that demand for these imported food groups is price-inelastic, while it is elastic for imported fruits and vegetables, oils, and staples.

Cross-price elasticities for imported food categories in low-income Arab countries are presented in

Table 4. Compensated cross-price elasticities in low-income countries.

Food Group	Compensated Cross-Price Elasticities
	${\mathit{P}}_1$	${\mathit{P}}_2$	${\mathit{P}}_3$	${\mathit{P}}_4$	${\mathit{P}}_5$
Animal products	-	0.398 (0.192)	0.277 (0.138)	0.060 (0.188)	0.140 (0.198)
Dairy products	0.120 (0.057)	-	0.147 (0.071)	0.289 (0.092)	0.149 (0.096)
Fruits and vegetables	0.086 (0.043)	0.152 (0.074)	-	0.518 (0.092)	0.384 (0.104)
Oils	0.024 (0.075)	0.385 (0.123)	0.667 (0.118)	-	0.801 (0.150)
Staples	−0.219 (0.073)	0.547 (0.100)	1.211 (0.155)	0.056 (0.154)	-

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

. The majority of the estimated elasticities are positive and statistically significant, indicating the presence of substitution relationships among various imported food groups. This suggests that when the price of one food category rises, consumers tend to substitute it with another. For example, a 1% increase in the price of fruits and vegetables is associated with a 0.086%, 0.152%, 0.518%, and 0.384% increase in demand for animal products, dairy products, oils, and staples, respectively. This indicates that consumers shift their spending toward these substitutes when fruits and vegetables become more expensive. These oils and staples exhibit the strongest substitution effect. Additionally, a 1% increase in the price of dairy products leads to a 1.211% increase in the demand for staples, the largest substitution effect in the table. This highlights a particularly strong substitution relationship between these two categories.

On the other hand, not all relationships are substitutes. For instance, staples and animal products show a complementary relationship, as a 1% increase in the price of animal products is expected to reduce the demand of staples by 0.219%. This suggests that, in low-income Arab countries, these two items are often consumed together.

4.3. Estimated Elasticities in Middle-Income Arab Countries

The estimated income elasticities, as shown in

Table 5. Income, uncompensated, and compensated for own-price elasticities in middle-income countries.

Food Group	Income Elasticities	Uncompensated Elasticities	Compensated Elasticities
Animal products	1.007 (0.132)	−0.341 (0.688)	−0.287 (0.687)
Dairy products	0.935 (0.025)	−0.669 (0.094)	−0.488 (0.092)
Fruits and vegetables	1.149 (0.083)	−1.451 (0.269)	−1.343 (0.266)
Oils	1.059 (0.040)	−0.867 (0.176)	−0.646 (0.179)
Staples	3.182 (0.022)	−1.614 (0.090)	−0.176 (0.087)

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

, for imported food categories in middle-income Arab countries show positive and statistically significant values, which indicates that these food items are normal goods. The responsiveness of dairy products to income changes was the lowest among all food categories, but staples demonstrated the highest responsiveness. Middle-income Arab consumers would increase their demand for imported dairy products by 0.93% and imported staples by 3.18% when their income rises by 1%. The income elasticity of imported dairy products below one indicates normal product status, while imported animal products, fruits and vegetables, oils, and staples qualify as luxury products in middle-income Arab countries because their income elasticities exceed one. Table 5 shows the uncompensated own-price import elasticities of demand in middle-income Arab countries. All calculated own-price elasticities for imported food categories were negative and statistically significant, except for animal products. Imported dairy products were the least responsive, while imported staples were the most responsive to price changes, with a 1% increase in prices expected to decrease the quantity demanded by 0.66% for dairy products and 1.61% for staples. Consequently, imported dairy products and oils were classified as price-inelastic, while imported fruits and vegetables and staples were classified as price-elastic in middle-income Arab countries.

Table 5 presents the compensated own-price elasticities for imported food categories in middle-income Arab countries. Except for animal products, all compensated own-price elasticities are found to be negative and statistically significant. The compensated own-price elasticities for imported dairy products, oils, and staples indicate that demand for these imported food groups is price-inelastic, while it is elastic for imported fruits and vegetables.

The cross-price elasticities for imported food categories in middle-income Arab countries appear in

Table 6. Compensated cross-price elasticities in middle-income countries.

Food Group	Compensated Cross-Price Elasticities
	${\mathit{P}}_1$	${\mathit{P}}_2$	${\mathit{P}}_3$	${\mathit{P}}_4$	${\mathit{P}}_5$
Animal products	-	−0.377 (0.355)	0.489 (0.443)	0.081 (0.561)	0.093 (0.508)
Dairy products	−0.102 (0.096)	-	0.359 (0.079)	0.026 (0.089)	0.204 (0.103)
Fruits and vegetables	0.275 (0.249)	0.742 (0.164)	-	0.445 (0.234)	−0.119 (0.257)
Oils	0.020 (0.141)	0.024 (0.082)	0.199 (0.105)	-	0.400 (0.140)
Staples	0.008 (0.061)	0.159 (0.044)	−0.105 (0.057)	0.114 (0.074)	-

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

. The majority of calculated cross-price elasticities show no statistical significance. The demand for imported dairy products shifts to imported fruits and vegetables and staples when their prices change. The demand for imported dairy products will increase by 0.35% when the price of imported fruits and vegetables rises by 1%. The price increase in imported dairy products leads to a 0.74% increase in demand for imported fruits and vegetables and a 0.15% increase in demand for imported staples. The price change in imported staples benefits all imported dairy products and oils because a 1% increase in imported staples’ price leads to a 0.20% increase in imported dairy products’ demand and a 0.40% increase in imported oils’ demand. The strongest substitution relationships exist between dairy products and fruits and vegetables, and both directions show statistical significance. The imported food categories in middle-income Arab countries demonstrate weak and mostly insignificant substitution relationships between different food pairs, which indicates limited consumer responses to price changes across various imported food categories.

4.4. Estimated Elasticities in High-Income Arab Countries

Table 7. Income, uncompensated, and compensated own-price elasticities in high-income countries.

Food Group	Income Elasticities	Uncompensated Elasticities	Compensated Elasticities
Animal products	1.112 (0.024)	−0.726 (0.223)	−0.510 (0.223)
Dairy products	1.025 (0.014)	−0.907 (0.080)	−0.650 (0.079)
Fruits and vegetables	0.897 (0.010)	−0.363 (0.064)	−0.038 (0.062)
Oils	1.076 (0.023)	−0.921 (0.126)	−0.805 (0.126)
Staples	12.775 (0.044)	−1.419 (0.150)	−0.333 (0.149)

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

demonstrates that all imported food categories show positive and statistically significant income elasticities, which proves that they function as normal food products. The demand for staples reacted more strongly to income changes than fruits and vegetables did. The income increase of 1% among consumers in high-income Arab countries would lead to a 0.89% rise in imported fruits and vegetables demand and a 12.77% increase in imported staple products demand. The food category of imported fruits and vegetables shows an income elasticity below one, which makes it a normal product, but imported animal products dairy products oils and staples qualify as luxury products in high-income Arab countries because their income elasticities exceed one.

Table 7 shows that all calculated own-price elasticities for imported food categories were negative and statistically significant, which confirms the expected inverse relationship between price and demand. The imported staples showed the highest price responsiveness among these categories while imported fruits and vegetables demonstrated the lowest price sensitivity. The quantity demanded of fruits and vegetables decreases by 0.36% when prices rise by 1% while staples experience a 1.41% decrease in quantity demanded. The imported animal products and dairy products together with fruits and vegetables and oils demonstrated price inelasticity but imported staples showed price elasticity in high-income Arab countries.

The compensated own-price elasticities for imported food categories in middle-income Arab countries appear in

Table 8. Compensated cross-price elasticities in high-income countries.

Food Group	Compensated Cross-Price Elasticities
	${\mathit{P}}_1$	${\mathit{P}}_2$	${\mathit{P}}_3$	${\mathit{P}}_4$	${\mathit{P}}_5$
Animal products	-	0.165 (0.113)	0.571 (0.123)	0.025 (0.095)	−0.251 (0.107)
Dairy products	0.128 (0.087)	-	0.045 (0.063)	0.351 (0.045)	0.125 (0.052)
Fruits and vegetables	0.306 (0.066)	0.031 (0.043)	-	−0.217 (0.035)	−0.082 (0.040)
Oils	0.045 (0.170)	0.815 (0.105)	−0.728 (0.118)	-	0.672 (0.093)
Staples	−1.596 (0.234)	0.073 (0.149)	1.386 (0.161)	0.471 (0.108)	-

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

. The compensated own-price elasticities of all imported food categories, except fruits and vegetables, show negative and statistically significant values. The compensated own-price elasticities for all imported food groups demonstrate that these imported food categories have price inelastic demand.

The cross-price elasticities for imported food categories in high-income Arab countries appear in Table 8. The majority of calculated cross-price elasticities show positive and statistically significant values, which demonstrates substitution relationships between different imported food groups. The price increase in imported dairy products and staples leads to a 0.81% and 0.67% increase in imported oil demand. The price increase in imported fruits and vegetables leads to a 0.72% decrease in imported oil demand. The price changes in imported food categories affect imported staples the most because a 1% increase in imported dairy product prices reduces imported staple demand by 1.59% while a 1% increase in imported fruits and vegetables prices increases imported staple demand by 1.38%. Additionally, animal products and fruits and vegetables were found to be complementary to imported staples, while oils were complementary to fruits and vegetables. Specifically, a price increase in animal products or fruits and vegetables leads to an increase in the demand for staples, while a price increase in oils leads to a decrease in demand for fruits and vegetables.

4.5. Robustness Checks

To examine the robustness of the results, the sample was divided into three sub-periods, corresponding to significant structural changes in the economic and political history of the Arab world. These changes include oil price shocks, regional conflicts, and policy reforms, which could potentially impact the stability of the estimated demand parameters. To assess the reliability of the results, demand elasticities were estimated for the following sub-periods: 1961–1980, reflecting the pre-major oil shocks and early development; 1981–2000, capturing post-oil shock adjustments and regional wars; and 2001–2020, coinciding with recent globalization, food crises, and new policy frameworks in the region. Results are reported in

Table 9. Estimated elasticities in different time periods in low-income countries.

Income Elasticities
Food Group	Time Period
	1961–2020	1961–1980	1981–2000	2001–2020
Animal products	1.306 (0.090)	2.515 (0.411)	2.102 (0.785)	0.314 (0.195)
Dairy products	0.829 (0.046)	1.063 (0.114)	0.843 (0.305)	0.550 (0.123)
Fruits and vegetables	0.620 (0.061)	0.607 (0.099)	2.246 (0.852)	1.285 (0.164)
Oils	1.159 (0.075)	1.212 (0.144)	0.195 (0.663)	0.593 (0.117)
Staples	4.087 (0.048)	4.530 (0.205)	4.272 (0.505)	3.763 (0.123)
Uncompensated own-price elasticities
Food Group	Time Period
	1961–2020	1961–1980	1981–2000	2001–2020
Animal products	−0.961 (0.150)	−2.386 (0.0578)	−1.275 (0.267)	−0.903 (0.096)
Dairy products	−0.884 (0.150)	−1.322 (0.253)	−0.579 (0.211)	−0.641 (0.104)
Fruits and vegetables	−1.270 (0.108)	−0.495 (0.161)	−0.959 (0.263)	−1.041 (0.109)
Oils	−2.066 (0.182)	−2.586 (0.554)	−1.199 (0.489)	−0.162 (0.198)
Staples	−3.013 (0.198)	−2.701 (1.026)	−2.983 (2.317)	−2.937 (0.397)

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

,

Table 10. Estimated elasticities in different time periods in middle-income countries.

Income Elasticities
Food Group	Time Period
	1961–2020	1961–1980	1981–2000	2001–2020
Animal products	1.007 (0.132)	1.042 (0.149)	0.295 (1.012)	2.109 (0.206)
Dairy products	0.935 (0.025)	0.896 (0.064)	0.282 (0.369)	0.958 (0.046)
Fruits and vegetables	1.149 (0.083)	0.663 (0.054)	0.648 (0.321)	1.695 (0.083)
Oils	1.059 (0.040)	0.939 (0.076)	0.743 (0.488)	0.918 (0.073)
Staples	3.182 (0.022)	3.132 (0.055)	3.961 (0.140)	3.110 (0.055)
Uncompensated own-price elasticities
Food Group	Time Period
	1961–2020	1961–1980	1981–2000	2001–2020
Animal products	−0.341 (0.688)	−0.214 (0.418)	−0.594 (0.627)	−0.927 (0.581)
Dairy products	−0.669 (0.094)	−0.499 (0.144)	−0.377 (0.188)	−0.666 (0.131)
Fruits and vegetables	−1.451 (0.269)	−0.731 (0.117)	−0.731 (0.386)	−0.263 (0.112)
Oils	−0.867 (0.176)	−0.192 (0.305)	−0.895 (0.380)	−0.418 (0.161)
Staples	−1.614 (0.090)	−2.115 (0.221)	−3.058 (0.171)	−1.018 (0.143)

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

and

Table 11. Estimated elasticities in different time periods in high-income countries.

Income Elasticities
Food Group	Time Period
	1961–2020	1961–1980	1981–2000	2001–2020
Animal products	1.112 (0.024)	1.367 (0.100)	0.750 (0.134)	1.152 (0.102)
Dairy products	1.025 (0.014)	0.910 (0.043)	1.229 (0.140)	0.918 (0.084)
Fruits and vegetables	0.897 (0.010)	0.907 (0.048)	0.636 (0.096)	0.951 (0.042)
Oils	1.076 (0.023)	0.886 (0.083)	2.170 (0.226)	0.899 (0.134)
Staples	12.775 (0.044)	10.539 (0.178)	16.626 (0.280)	13.407 (0.179)
Uncompensated own-price elasticities
Food Group	Time Period
	1961–2020	1961–1980	1981–2000	2001–2020
Animal products	−0.726 (0.223)	−0.873 (0.303)	−0.219 (0.276)	−1.072 (0.320)
Dairy products	−0.907 (0.080)	−1.174 (0.102)	−0.739 (0.253)	−0.894 (0.233)
Fruits and vegetables	−0.363 (0.064)	−0.616 (0.165)	−0.549 (0.093)	−0.231 (0.092)
Oils	−0.921 (0.126)	−0.931 (0.182)	−1.386 (0.238)	−0.079 (0.390)
Staples	−1.419 (0.150)	−1.779 (0.622)	−2.989 (1.193)	−2.715 (0.507)

Note: Bold indicates significance at the 5% significance level. Standard errors are in parentheses.

.

In low-income Arab countries, a notable change in the estimation of income elasticities can be observed for fruits and vegetables and oils. Fruits and vegetables seem to have transitioned into luxury items in the second and third time periods. In terms of oils, they were regarded as necessities in the third period. For the other products, no significant changes were noticed across different sub-periods. Regarding uncompensated own-price elasticities, animal products and dairy products became more elastic over time, while fruits and vegetables became more price-elastic. For the remaining products, no notable changes were observed.

In middle-income Arab countries, a significant change in income elasticities was seen for animal products in the third time period, where the magnitude of the estimated income elasticity is greater than in previous periods. Fruits and vegetables shifted to luxury status after being considered necessities in the first and second time periods. Concerning uncompensated own-price elasticities, fruits and vegetables, oils, and staples exhibited less price elasticity in the third time period. For the other estimated demand elasticities, no significant changes were noted across the various time periods.

In high-income Arab countries, oils were viewed as luxury products in the second time period after being classified as necessities in the first and third time periods. In terms of uncompensated own-price elasticities, dairy products were more price elastic in the first time period compared to the second and third time periods. Conversely, staples became more price elastic in the second and third time periods than they were in the first. For the other estimated demand elasticities, no significant changes were observed.

Therefore, two main findings emerge from the robustness checks. First, the post-oil shock adjustments and regional wars in the second time period had no significant impact on the estimated elasticities in middle-income Arab countries. The price sensitivity of consumers to animal products and fruits and vegetables decreased in low-income countries and for dairy products in both low- and high-income Arab countries. Consumers in high-income countries also became more price-sensitive to staples during this time. Second, during the recent globalization and food crises of the third time period, fruits and vegetables transformed into luxury products in low- and middle-income Arab countries. Overall, this time period caused consumers to become less price-sensitive to fruits and vegetables in low- and middle-income Arab countries and to dairy products in both low- and high-income Arab countries. Consumers also showed decreased price sensitivity to staples in middle-income Arab countries, making this food category more elastic in high-income Arab countries.

While recognizing that dynamic specifications could capture short-term adjustments and reveal the path of consumer responses over time, our use of the static AIDS model is especially suitable for addressing the long-term policy questions central to this study. The main goal of this research is to understand the persistent and structural patterns of food import demand responsiveness over six decades and across different income groups in the Arab region. Policies related to food security, such as long-term investments in import diversification, trade agreements, and major subsidy or tariff changes, are generally based on these underlying long-term demand characteristics rather than on short-term fluctuations. Therefore, a static model offers a clear view of these equilibrium relationships. However, we acknowledge that excluding dynamic elements means that our estimates assume the immediate adjustment of demand to changes in prices and income, which may not fully capture real consumer behavior or market dynamics, where adjustments are often gradual. This simplification might cause some aggregation bias over time, as it inherently smooths out short-term market frictions or habit-formation effects. While we recognize this bias, its effect on the long-term policy implications derived from broad food import trends is considered minor within the scope of our study, which focuses on understanding the fundamental demand structures for strategic policymaking.

4.6. Discussion

The food security of Arab nations that depend heavily on imported food faces substantial threats. The dependence of these nations on foreign food sources makes them more susceptible to global price changes and supply chain interruptions. The research by El-Shagi et al. [39] shows that high-income nations have elastic import demand. The income elasticities for staples are small in magnitude, while most food categories behave as normal products and necessities for Arab countries. The nation faces price fluctuations risks because it depends heavily on import markets that lack sufficient diversity. The income elasticities of most food products in all income-level Arab countries are smaller than their own-price elasticities. The research by Suanin [40] shows that processed food imports from developing countries in the United States have low price elasticity and high-income elasticity. The study reveals that rising relative prices will not negatively affect import growth because income-driven demand expansion will increase imports. The magnitudes of estimated own-price elasticities suggest that Arab consumers would replace these imported food products with locally produced substitutes when faced with higher import prices. However, this is less likely to be the case for all Arab countries, particularly those with limited arable land, where food production does not meet demand, necessitating imports to address food shortages.

When comparing the results of this analysis with the study conducted by Walters and Jones [20] in the Caribbean, estimated elasticities for oils and staples in the Arab region are significantly higher. This difference may have resulted from variations in market development, consumption patterns, and the availability of food substitutes between the two regions. However, the estimated elasticities for oils in middle-income Arab countries are like those estimated in Turkey [41]. The own-price elasticity for staples is low in middle- and high-income Arab countries, revealing these nations’ dependency on imports. The positive influence of the Russia–Ukraine war on food price indices imposed significant risks for nations with high import dependency [42].

One of the many recommendations for proactive policy is to boost domestic production to protect these countries from shortages and volatile and excessive import prices. To reduce market risk, their governments must intervene and provide production subsidies to domestic producers, as there is an inverse relationship between domestic production and food imports; that is, when domestic food production rises, food imports fall [43]. Offering local farmers subsidies can help them reduce production costs, which could lead to more affordable food prices domestically. In Iraq, the demand for red meat among households is elastic, according to Aljumaili [44]. Subsidies for livestock producers can thus contribute to an increase in domestic supply, which can lower prices and encourage more domestic consumption, thereby improving food self-sufficiency. However, while governments incur expenses from providing subsidies, it may be more beneficial for the governments of Arab nations to invest resources in developing the infrastructure of the food industry which will better help boost domestic production. As financing programs to boost domestic production may be challenging for low-income countries, applying a tax on imported food appears to be a valid fiscal instrument to support all citizens involved in the food value chain. Implementing the tax will decrease excessive imports and make locally produced food more accessible at affordable prices. To help control excessive imports, low- and middle-income countries can follow high-income countries by enforcing genuine food safety regulations to reduce the volume of imported food. However, to ensure food security and prevent the spillover effect of these policies, domestic production must meet domestic demand, and the revenue generated from taxation must be used to strengthen domestic production.

5. Conclusions

The food industry of the Arab world encounters multiple intricate problems which require thorough examination and strategic measures to achieve enduring stability. The primary goal of this research involved determining the demand parameters for imported food categories throughout the Arab world. The FAO-STAT database provided import quantity and value information for animal products, dairy products, fruits and vegetables, and oils and staples from 1961 to 2020. The static Almost Ideal Demand System model was used to determine demand parameters for low-income, middle-income, and high-income Arab countries. This research reveals that food imports have grown steadily over time, with staples showing the most significant rise in consumption. The Arab region depends heavily on food imports because many countries lack sufficient arable land, which creates food security risks and makes the region susceptible to price changes and worldwide supply disruptions. The income elasticities indicate that most imported food categories function as essential products because their demand increases when income levels rise.

Fruits and vegetables show minimal income sensitivity in all Arab nations when compared to other food categories. The cross-price elasticities show that substitution relationships exist between different imported food groups. The own-price elasticity of imported food demand is higher in low-income Arab countries than in middle- and high-income Arab countries. The estimated own-price elasticities indicate that Arab consumers would switch to local substitutes when import prices increase. However, in countries with limited arable land and insufficient domestic production capacity to meet food demand, reliance on imports remains high, which compromises food security. The results of the robustness checks showed that while there are some variations in elasticity estimates across periods, the main findings remained robust.

The findings show that price and income elasticities for imported food differ substantially across low-, middle-, and high-income Arab countries. Notably, the demand for staple food imports is price elastic in all income groups, meaning that consumers are highly responsive to changes in staple food prices. This has critical implications for policy. In low-income countries, where food security is most vulnerable, subsidies or safety nets should be prioritized to shield populations from global price shocks, as even modest price increases can lead to substantial reductions in staple imports and threaten basic food access. Because of the elastic demand for staples, a 10% increase in import prices resulting from a tariff could lead to a 30% reduction in the quantity demanded. Consequently, total import expenditure would decline as consumers respond strongly to the price hike by reducing their demand. Oils are the second most affected food category by an import tariff shock, with total import expenditure expected to decrease by 20% following a 10% increase in oil import prices. In middle-income countries, where demand is also elastic but somewhat more responsive to income changes, policies that promote the diversification of import sources and investment in domestic production can help manage both affordability and supply stability. In high-income countries, where demand for higher value imported foods is more elastic, targeted tariffs or taxes on luxury imports and incentives for healthy dietary choices may be more effective. For staples specifically, a 10% increase in import prices due to tariffs could result in a reduction in import volumes exceeding 10%, underscoring the potential for significant unintended consequences if price-based interventions are not carefully designed. Thus, tailoring policy interventions to the specific elasticity profiles of each income group—and recognizing the pronounced price sensitivity of staple food demand—will enhance food security outcomes and ensure that measures are both efficient and equitable across the diverse economies of the Arab region. As shown in Appendix A, Figure A1, cereals made up over 95% of the imported staples bundle in 2020 in low- and middle-income countries, while pulses accounted for about 1% of the imports. This shows that the overall results for staples are heavily influenced by cereals. As a result, the estimated price and income elasticities, as well as any observed trends or shocks for the staples group, mainly reflect the behavior of cereals, with pulses having only a small impact.

The price-inelasticity of demand for dairy products in low- and middle-income countries, coupled with significant price increases over the last two decades, highlights the need for policy intervention to mitigate rising food import expenditures. This price increase, exacerbated by the lack of domestic competition, is particularly concerning for importing countries, as it results in a substantial surge in food costs. Given the low average per capita real income in many low-income Arab countries, these rising costs pose a major threat to food security. Exchange rate volatility leads to fluctuating import costs, exacerbating food price instability and reducing consumers’ ability to afford basic food items. To mitigate this, policymakers should develop strategies to stabilize exchange rates and manage inflation, reducing uncertainty and improving affordability for consumers. High inflation further erodes purchasing power, making basic food items more expensive. To reduce dependency on imports, increasing domestic production is crucial. This can be achieved through targeted subsidies, research and development, and investments in agricultural infrastructure. Strengthening food security involves not only increasing local production, but also improving supply chain resilience to external shocks. This can be achieved by diversifying import sources and forging international trade alliances, which can buffer against price fluctuations and supply chain disruptions.

In addition to improving domestic production, governments should implement policies to stabilize exchange rates and control inflation, as these factors directly influence food prices and consumer purchasing power. While subsidies for local farmers can help reduce the cost of domestically produced food, governments should also invest in broader food industry infrastructure. This investment can lead to lower production costs, enabling local food prices to remain competitive and thus mitigate the reliance on imported goods.

This study’s analysis of food import demand elasticities directly supports the achievement of Sustainable Development Goal 2, which aims to end hunger, ensure access to safe and nutritious food, and promote sustainable agriculture. By quantifying how import demand for staples and other key food groups responds to changes in prices and incomes, our results provide policymakers with actionable evidence to design interventions—such as targeted subsidies or tariff adjustments—that can stabilize food availability and affordability. The finding that demand for imported staples is elastic in all income groups highlights the region’s high sensitivity to international price fluctuations, meaning that increases in import costs can quickly reduce access to food for vulnerable populations. This pronounced responsiveness underscores the need for targeted social safety nets and policies that enhance the stability of food supplies, including diversifying import sources, establishing strategic reserves, and strengthening regional trade agreements to buffer against global market shocks. Ensuring a steady and affordable supply of diverse food imports also supports better nutritional outcomes and food utilization. Collectively, these findings provide a clear framework for policymakers to design integrated strategies that safeguard food security and advance progress toward SDG 2 targets in the Arab region.

While the findings of this study provide valuable insights into the demand for food imports in the Arab region, there are several limitations to consider. Our primary focus was on estimating long-run elasticities using the static AIDS model, as our research aims to inform policy on the persistent, structural drivers of food import demand in Arab countries over several decades. Incorporating a dynamic model could indicate that short-run elasticities are generally smaller than long-run elasticities, reflecting slower consumer adjustment to price and income changes due to habits or market rigidities. We acknowledge this as a limitation and suggest that future research could employ dynamic specifications to complement our findings and provide a more comprehensive view of both short- and long-run demand responses.

Additionally, demand elasticities were estimated at the aggregate level. We agree that further disaggregation could, in theory, unveil more nuanced demand patterns—particularly for commodities with distinct consumption trends or policy significance. However, given the scope and data limitations of our study, we prioritized reliable, regionally comparable estimates over potentially less dependable, highly disaggregated results. We recommend that future research, with access to more detailed and consistent data, explore finer product categories to enhance the understanding of food import demand dynamics in the Arab region.

Moreover, this study used unit prices as a proxy for import prices, which may lead to some inaccuracies in the elasticity estimates. Using unit prices as a proxy for import prices introduces potential measurement errors because it does not account for changes in product quality, inflation, or the composition of high-value processed goods. These limitations may result in an underestimation of price elasticities, especially categories where quality upgrades or value-added products can inflate unit prices without accurately reflecting true price changes. Consequently, the estimated demand may seem less sensitive to price fluctuations than it is. Therefore, we acknowledge that the reported elasticities for certain food categories should be interpreted with caution, and future research utilizing more granular, quality-adjusted price data would help to further validate these results. Further analyses could explore the impact of trade agreements on food imports to provide a more complete picture of how international relations and policies influence the food security landscape in the Arab world.

In conclusion, improving food security in the Arab region requires a multi-faceted approach that includes both strengthening domestic food production and enhancing the resilience of food imports. A proactive approach that involves strategic investments, subsidies for local producers, and international trade partnerships will be essential to ensuring the region’s food security and reducing vulnerability to global disruptions. Considering global uncertainties, immediate action is essential to secure a stable and resilient food supply for Arab populations, ensuring both long-term food security and economic stability.

While this study focuses on the economic determinants of food import demand, it is important to recognize that food security in the Arab region is shaped by a complex interplay of environmental and resource constraints, particularly water scarcity. The recent literature highlights that the water–food–energy nexus is a critical dimension for understanding the region’s vulnerability and the sustainability of its food systems. Future research should aim to incorporate indicators of water availability, irrigation dependency, and energy costs into demand analyses to capture how these factors interact with price and income elasticities. Integrating such environmental variables would provide a more comprehensive assessment of food security risks and support the development of policy interventions that do not only address economic and resource-based constraints. We recommend this interdisciplinary approach as a high priority for advancing food security research and policy in the Arab region.