Determinants of Economic Growth in Somalia: ARDL Model

Abdisalan Aden Mohamed; Salad Shire Mohamud

doi:10.18535/ijsrm/v11i01.em10

Abstract

Using an autoregressive distributed lag model (ARDL) and error correction technique, this paper investigates the short- and long-run relationships between exports, imports, and FDI on economic growth in Somalia. Secondary data was collected from the SESRIC website. The study spans the years 1995 to 2020. The result of the study revealed short- and long-term relationships between the variables. While FDI and exports have a negative long-term relationship with economic growth, imports have a positive long-term relationship. It also shows that FDI has a negative, short-run insignificant relationship with economic growth, whereas imports and exports have a significant, short-run relationship. Diagnostic tests were applied, and the results demonstrate that the model's validity for Somalia's economic growth is characterized by normality, the absence of serial correlation, and heteroscedasticity

Keywords

FDIGDPexportsimportsARDLECM

References

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[refR-2] Awokuse, T. O. (2008). Trade openness and economic growth: Is growth export-led or import-led? Applied Economics, 40(2), 161–173. https://doi.org/10.1080/00036840600749490DOI ↗Google Scholar ↗

[refR-3] Bahramian, P., & Saliminezhad, A. (2020). On the relationship between export and economic growth: A nonparametric causality-in-quantiles approach for Turkey. The Journal of International Trade & Economic Development, 29(1), 131–145. https://doi.org/10.1080/09638199.2019.1648537DOI ↗Google Scholar ↗

[refR-4] Balassa, B. (1978). Exports and economic growth: Further evidence. Journal of Development Economics, 5(2), 181–189.Google Scholar ↗

[refR-5] Boame, A. K. (1998). Primary-export-led growth: The evidence of Ghana. Journal of Economic Development, 23(1), 175–194.Google Scholar ↗

[refR-6] Central Bank of Somalia. (2019). Annual Report (pp. 1–106). https://centralbank.gov.so/wp-content/uploads/2021/11/Annual-Report-2019_Final.pdfGoogle Scholar ↗

[refR-7] El-Sakka, M. I., & Al-Mutairi, N. H. (2000). Exports and Economic Growth: The Arab Experience. The Pakistan Development Review, 39(2), 153–169. JSTOR.Google Scholar ↗

[refR-8] Fosu, A. K. (2001). Economic Fluctuations and Growth in Sub-Saharan Africa: The Importance of Import Instability. The Journal of Development Studies, 37(3), 71–85. https://doi.org/10.1080/00220380412331321971DOI ↗Google Scholar ↗

[refR-9] Garcimartín, C., Rivas, L. A., & De Sarralde, S. D. (2008). Accounting for Irish growth: A balance-of-payments-constraint approach. Journal of Post Keynesian Economics, 30(3), 409–433. https://doi.org/10.2753/PKE0160-3477300306DOI ↗Google Scholar ↗

[refR-10] Hussein Ali Mohamud & Ali Dahir Abdi. (2022). The Role of International Trade and Agricultural Production on Economic Growth in Somalia: Johansson Cointegration Approach. African Journal of Business and Economic Research, 17(4), 123–146. https://doi.org/10.31920/1750-4562/2022/v17n4a6DOI ↗Google Scholar ↗

[refR-11] Jin, J. C., & Yu, E. S. (1996). Export-led growth and the US economy: Another look. Applied Economics Letters, 3(5), 341–344.Google Scholar ↗

[refR-12] Muhammad Adnan Hye, Q. (2012). Exports, imports and economic growth in China: An ARDL analysis. Journal of Chinese Economic and Foreign Trade Studies, 5(1), 42–55. https://doi.org/10.1108/17544401211197959DOI ↗Google Scholar ↗

[refR-13] Odhiambo, N. M. (2022). Is export-led growth hypothesis still valid for sub-Saharan African countries? New evidence from panel data analysis. European Journal of Management and Business Economics, 31(1), 77–93. https://doi.org/10.1108/EJMBE-06-2020-0156DOI ↗Google Scholar ↗

[refR-14] Oyebowale, A. Y., & Algarhi, A. S. (2020). Macroeconomic determinants of economic growth in Africa. International Review of Applied Economics, 34(6), 839–857. https://doi.org/10.1080/02692171.2020.1792422DOI ↗Google Scholar ↗

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