The Impact of Imports and Exports Performance on the Economic Growth of Somalia

Abstract
In this paper the impact of exports and imports on the economic growth of Somalia over the period 1970-1991
was investigated. The study applied econometric methods such as Ordinary Least Squares technique. The
Granger Causality and Johansen Co-integration tests were also used for analysing the long term association. By
using Augmented Dickey-Fuller (ADF) and Phillip-Perron (PP) stationarity test, the variables proved to be
integrated of the order one 1(1) at first difference. Johansen test of co-integration was used to determine if there
is a long run association in the variables. To determine the direction of causality among the variables, both in the
long and short run, the Pair-wise Granger Causality test was carried out. It was found that economic growth does
not Granger Cause Export but was found hat export Granger Cause GDP. So this implies that there is
unidirectional causality between exports and economic growth. Also there is bidirectional Granger Causality
between import and export. The results show that economic growth in Somalia requires export-led growth
strategy as well as export led import. Imports and exports are thus seen as the source of economic growth in
Somalia