The Impact of Agricultural Production on Economic Growth in Somalia

Abstract

This study examines the impact of agricultural production dominated by crop and livestock output and economic growth in Somalia using time-series data from to 1990-2022. Despite agriculture’s major role in Somalia’s economy, empirical evidence on its growth effects remains limited, especially during the post-conflict period. Using an Autoregressive Distributed Lag (ARDL) framework, this study examines the long-run and short-run dynamics of GDP, agricultural production, gross fixed capital formation, arable land, and agricultural employment, supplemented by Granger causality analysis. Funding suggests a stable long-run equilibrium relationship between the variables. Agricultural production and capital formation have a positive and statistically significant impact on economic growth, whereas arable land and agricultural employment have poor and inconsistent contributions, indicating structural inefficiencies in land use and labor productivity.  Evidence of bidirectional causality between agricultural production and GDP implies mutual reinforcement rather than a one-way growth process. Following the shocks, short-run equilibrium occurred rapidly. The findings highlight the necessity of productivity-enhancing agricultural investment for long-term economic growth in unstable and conflict-affected economies, such as Somalia.