| Abstrakt: |
This study investigates the relationship between domestic investment and economic growth in Somalia, utilizing time series data from 1992 to 2021. The primary research question centers on understanding the dynamics of this relationship and its implications for Somalia's economic development. Employing rigorous statistical analyses, including long-term cointegration tests, Vector Error Correction Model (VECM), and Granger causality tests, the study reveals insightful findings. The VECM analysis establishes a positive and significant impact of domestic investment on Somalia's economic growth in both the short and long term. Interestingly, foreign direct investment and exports contribute positively to economic growth in the long term. Conversely, exchange rate volatility adversely affects Somalia's economic growth prospects in the long run. The Granger causality test identified a bidirectional causal relationship between domestic investment and economic growth and a unidirectional linkage from exports and exchange rates to Somalia's Gross Domestic Product (GDP). Notably, a confirmed unidirectional relationship exists from economic growth to foreign direct investment. This study significantly contributes to the existing literature by providing a nuanced understanding of the interplay between domestic investment, foreign direct investment, exports, exchange rates, and economic growth in Somalia. The findings emphasize the importance of fostering a conducive environment for domestic investments, facilitating credit access for exporters, promoting human capital development, and implementing effective exchange rate management to sustain and enhance economic growth in Somalia. [ABSTRACT FROM AUTHOR] |
