This study examines the effects of external debt (ED) and foreign direct investment (FDI) on
economic growth in Somalia from 1990 to 2021, employing the autoregressive distributed lag
(ARDL) model to analyze data sourced from the World Bank, SESRIC, and World Data. The
ARDL model, chosen for its ability to handle the variables' integration properties, reveals
significant long-term and short-term relationships between ED, FDI, and economic growth. In
the long run, the findings indicate that both ED and FDI positively impact economic growth,
with a 1% increase in ED and FDI associated with a 1.7939% and 0.0788% increase in GDP,
respectively. Short-run results further suggest immediate adjustments towards long-term
equilibrium, highlighted by the Error Correction Term, which corrects about 23.37% of
disequilibrium annually. Policy implications drawn from the study emphasize the critical role
of FDI and ED in fostering Somalia's economic development. The positive long-term effects
of ED and FDI on GDP growth suggest that strategic management of external debt and
encouraging foreign direct investment can significantly contribute to sustainable economic
growth. Policymakers are advised to create favorable conditions for FDI and to utilize external
debt responsibly, ensuring that borrowed funds are invested in productive sectors that stimulate
economic expansion and development.