This study investigates the interconnections between external debt, energy consumption, industrialization, and environmental quality in Somalia
over the period 1990-2019, utilizing the ARDL bounds testing approach. Notably, a positive correlation is found between energy consumption and
CO2
emissions, emphasizing the imperative for sustainable practices. In the long run, external debt is observed to have an insignificant impact
on environmental quality, suggesting a strategic opportunity for policymakers to channel external funds towards environmentally sustainable
projects. Short-term strategies underscore the positive link between decreased industrialization and improved environmental quality, while a
cautious approach to external debt is crucial due to its short-term negative impact. The significance of the error correction term underscores
the need for adaptive policies. Overall, the study advocates for comprehensive policies integrating sustainable practices and directing external
financing towards eco-friendly projects, alongside a capacity building and technology transfer partnerships for environmentally conscious
development in Somalia.
Keywords: External Debt, Energy Consumption, Industrialization, CO2
, Autoregressive Distributed Lag
JEL Classifications: P18, F64, H63