This study investigates the relationship between rapid urbanization and poverty levels in Somalia,
employing annual data spanning from 1990 to 2022. The analysis focused on critical variables, including
urbanization rates, CO2 emissions as a measure of climate change, and unemployment rates, with poverty
quantified by real GDP per capita. A Johansen cointegration approach is utilized to ascertain long-term equilibrium
relationships, while a Vector Error Correction Model (VECM) captures short-term dynamics. Results indicate that
urbanization exerts a significant positive influence on poverty in the long term; specifically, a 1% increase in
urbanization correlates with a 1.73% rise in poverty levels. Additionally, unemployment demonstrates a substantial
and statistically significant positive effect, whereby a 1% increase in unemployment results in a 9.64% increase in
poverty. In contrast, CO2 emissions were found to be statistically insignificant. The long-run equilibrium
adjustment rate is approximately 12.66% per period, suggesting a moderate pace of return to equilibrium. In the
short run, the unemployment rate negatively influences poverty, with a coefficient of -2.369508. Furthermore, CO2
emissions exhibit a delayed yet significant positive effect on poverty, indicated by a coefficient of 0.681835.
Granger causality tests reveal strong causal relationships between past unemployment rates and future poverty
levels, as well as between past urbanization trends and subsequent poverty levels. The findings underscore the
necessity for integrated policies that address urbanization, enhance climate resilience, and promote employment,
aiming to alleviate poverty in Somalia.
Keywords: Cointegration; Rapid urbanization; CO2 emissions; GDP per capita; Employment; Climate resilience