ABSTRACT
Globally, the exportation of agricultural products plays a critical role in driving economic
growth and stability, often acting as a substantial contributor to gross domestic product
(GDP), employment, and foreign exchange earnings in agrarian economies. As a vital pillar of many developing countries’ economies, the agricultural sector’s export dynamics
have remained understudied, particularly in integrating climatic, economic, and institutional-related factors. Thus, this study explores the determinants of agricultural exports
in Somalia between 1985 and 2017. While the evidence from the ARDL bounds-testing
cointegration analysis indicates that precipitation improves agricultural exports in the
long-run, the role of agricultural production was insignificant. The analysis indicates that
currency depreciation can boost export competitiveness in the long-run, whereas currency depreciation may lead to reduced exports in the short-run. Moreover, short-run
domestic investments positively impact exports, but this effect diminishes over the
long-run. Remarkably, institutional quality and FDI inflows are consistently identified as
significant enhancers of agricultural exports. In addition, the Granger causality analysis
indicates that exchange rates, institutional quality, and FDI inflows unidirectionally predict agricultural exports. Following the outcomes of this exploration, the study recommends enhancing rainwater harvesting and irrigation systems, focusing on value
addition and market diversification, stabilizing currency for competitive advantage, and
improving institutional quality by streamlining FDI policies.
IMPACT STATEMENT
This analysis profoundly advances the discourse on Somalia’s agricultural export potential by presenting an incisive linkage between institutional quality, FDI, and climatic factors such as precipitation. It stresses the transformative capacity of robust governance
structures and strategic economic policies to elevate Somalia’s agricultural sector as a
pivotal driver of sustainable economic growth and global competitiveness. By providing
evidence-based insights into institutional reform and external investment roles, the
study handles critical bottlenecks in agricultural productivity and trade. Moreover, the
research indicate the broader socioeconomic and environmental implications of enhancing agricultural exports, including rural development, job creation, and improved resilience to climate challenges. It positions Somalia’s agricultural sector not merely as an
economic asset but as a cornerstone for national stability and international integration.
The findings are of particular importance to policymakers, development agencies, and
global investors, equipping a strategic framework for facilitating sustainable growth in a
region disproportionately affected by climate change and economic volatility. By articulating a clear pathway to amplify agricultural exports while addressing structural vulnerabilities, this study lays a foundation for subsequent research and policy interventions
aimed at assuring that Somalia’s agricultural sector becomes a model for resilience,
innovation, and inclusive growth in sub-Saharan Africa.