A Causal Analysis on Foreign Trade and Economic Growth: The Case of Somalia

Sadak Mohamud Hassan

doi:10.18535/ijsrm/v10i8.em02

Abstract

The relationship between foreign trade and economic growth is one of the most important research areas in the literature. Because the direction and importance of this relationship can vary from country to country and from time to time. In this study, the causal relationship between Somalia's gross domestic product (GDP), exports and imports for the period 2008-2021 was investigated. Data were obtained from the World Bank database and the website of the Organisation of Islamic Cooperation. For this purpose, whether the series used in the study are stationary or not was investigated by the ADF test and it was determined that all series were integrated at the first level. Johansen Co-integration Analysis was carried out to test the existence of a long-term relationship between the series due to the same level of integration of the series. Here, according to the results of both the trace statistics and the maximum eigenvalue statistics, it is concluded that there is no cointegration vector and it is decided that there is no cointegration relationship between the series. This means that the economy is still not largely dependent on the country's domestic production, but depends on other factors such as remittances by Somalis living abroad and financial support from the international community, including budget subsidies, development projects and money spent on refugee problems.

Keywords: Imports, Exports, Economic Growth, Causality, Var model.

Keywords

ImportsExportsEconomic GrowthCausalityVar model

References

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[refR-1] Adnan Hye, Q. M., & Boubaker, H. B. H. (2011). Exports, Imports and Economic Growth: An Empirical Analysis of Tunisia. IUP Journal of Monetary Economics, 9(1).Google Scholar ↗

[refR-2] Akhter, M. (2015). The impact of export and import on economic growth in Bangladesh. World vision, 9(1), 66-81.Google Scholar ↗

[refR-3] Awokuse, T. O. (2007). Causality between exports, imports, and economic growth: Evidence from transition economies. Economics letters, 94(3), 389-395.Google Scholar ↗

[refR-4] Baharumshah, A. Z., & Rashid, S. (1999). Exports, imports and economic growth in Malaysia: Empirical evidence based on multivariate time series. Asian economic journal, 13(4), 389-406.Google Scholar ↗

[refR-5] Bakari, S., & Mabrouki, M. (2016). The Relationship among exports, imports and economic growth in Turkey.Google Scholar ↗

[refR-6] Çamurdan, B. (2013). Türkiyede 1999-2013 Dönemi İçin İhracat, İthalat Ve Ekonomik Büyüme Arasindaki Nedensellik İlişkisi. Social Sciences, 8(4), 183-195.Google Scholar ↗

[refR-7] Çetintaş, H., & Barişik, S. (2009). Export, import and economic growth: The case of transition economies. Transition Studies Review, 15(4), 636-649.Google Scholar ↗

[refR-8] Esfahani, H. S. (1991). Exports, imports, and economic growth in semi-industrialized countries. Journal of development economics, 35(1), 93-116.Google Scholar ↗

[refR-9] Hye, Q. M. A. (2012). Exports, imports and economic growth in China: an ARDL analysis. Journal of Chinese Economic and Foreign Trade Studies.Google Scholar ↗

[refR-10] İZGİ, B. B., & YILMAZ, H. (2018). Türkiye’de ekonomik büyüme, ihracat ve ithalat: Nedensellik ilişkisi (1992-2016). İktisadi Yenilik Dergisi, 5(2), 54-74.Google Scholar ↗

[refR-11] Millia, H., Syarif, M., Adam, P., Rahim, M., Gamsir, G., & Rostin, R. (2021). The Effect of Export and Import on Economic Growth in Indonesia. International Journal of Economics and Financial Issues, 11(6), 17.Google Scholar ↗

[refR-12] Pacheco-López, P. (2005). The effect of trade liberalization on exports, imports, the balance of trade, and growth: the case of Mexico. Journal of post keynesian economics, 27(4), 595-619.Google Scholar ↗

[refR-13] Ramos, F. F. R. (2001). Exports, imports, and economic growth in Portugal: evidence from causality and cointegration analysis. Economic modelling, 18(4), 613-623.Google Scholar ↗

[refR-14] Romer, P. M. (1994). The origins of endogenous growth. Journal of Economic perspectives, 8(1), 3-22.Google Scholar ↗

[refR-15] Triyawan, A., Latifa, H., Seriki, L. L., & Alfaqeeh, A. (2021). INFLUENCE OF EXPORT AND IMPORT TOWARD ECONOMIC GROWTH IN CANADA IN 2010-2019. Fokus Ekonomi: Jurnal Ilmiah Ekonomi, 16(2), 341-355.Google Scholar ↗

[refR-16] Turan, G., & Karamanaj, B. (2014). An empirical study on import, export and economic growth in Albania. Academic Journal of Interdisciplinary Studies, 3(3), 428.Google Scholar ↗

[refR-17] Yenisu, E. (2019). Türkiye’de İhracat, İthalat ve Ekonomik Büyüme İlişkisi: ARDL Sınır Testi Yaklaşımı. Gaziantep University Journal of Social Sciences, 18(3), 1175-1193.Google Scholar ↗