The Dynamic Impact of Agriculture, Education, Foreign Direct Investment, and Trade Openness on Economic Growth in Somalia (1990–2022)

This study examines the impact of agriculture, education, foreign direct investment (FDI), and trade openness on Somalia’s economic growth from 1990 to 2022. Using annual time series data sourced from the World Bank, SESRIC, and UNESCO, the study applies the Autoregressive Distributed Lag (ARDL) approach to explore both short-run and long-run relationships among the variables. The Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegrating Regression (CCR) estimators are further employed to confirm the robustness of the long-run findings. The results of the unit root tests (ADF and PP) indicate that the series are integrated of mixed order, I(0) and I(1), justifying the use of the ARDL framework. The findings reveal that agriculture, education, and trade openness exert positive and statistically significant effects on economic growth in the long run, whereas FDI shows an insignificant impact during the study period. In the short run, agriculture and FDI are found to stimulate growth, while trade openness and education exhibits a temporary negative influence. The Granger causality analysis identifies bidirectional causality between agriculture and growth, and unidirectional causality from education and trade openness to growth. These results underscore the critical roles of agriculture and human capital formation as long-term engines of Somalia’s economic development, supported by open trade policies. Policymakers are encouraged to enhance agricultural productivity through modernization, expand investment in education, and promote export diversification to sustain inclusive and resilient economic growth. JEL Classification: O40, O13, I25, F21