Examining the Causal Relationship Between Exports and Economic Growth: Empirical Evidence from Somalia
摘要
This study examines the relationship between of exports, Foreign Direct Investment (FDI), inflation, and economic growth in Somalia from 1977 to 2021. Despite facing significant challenges, including civil war, piracy, and macroeconomic volatility, agriculture and pastoralism, especially livestock and banana exports, have remained as vital contributors to the nation’s economic performance. The research investigates both short-term and long-term dynamics through a comprehensive analysis using the Autoregressive Distributed Lag model (ARDL). The findings indicate that exports, particularly livestock exports, significantly enhance Somalia’s economic growth. Foreign Direct Investment (FDI) is a substantial long-term and positive contributor to GDP growth. Conversely, inflation acts as a deterrent to economic growth. Cointegration correlations highlight the determined nature of these connection, with an error correction term indicating a convergence rate of 1.12% per year. Nevertheless, these findings, the study recognizes limitations, such as data constraints and the exclusion of specific challenges faces in Somalia. Furthermore, the implications of this research relate to extend various stakeholders, including policymakers, investors, and international donors. Recommendations encompass export promotion, facilitation of foreign direct investment, management of inflation, and prioritizing of public investment. The paper continues by emphasizing potential directions for future research, advocating for a thorough investigation of the difficulties and opportunities within Somalia’s economic landscape. This analysis provides detailed information that help guide strategic decision-making for sustained economic growth in Somalia.