Does Political Instability Hamper Exports? An Empirical Evidence from Somalia

Abstract

The purpose of this study is to assess the role of political instability in exports in Somalia. An econometric method of ordinary least square (OLS) and a time series data spanning 1985-2017 has been utilized. The empirical results indicate that political instability hamper exports in Somalia. Furthermore, control variables employed for the study have produced different results. Exchange rate and economic growth significantly undermine exports in Somalia. But foreign direct investment is statistically insignificant. It is worth mentioning that the model is free from all diagnostic tests such as, serial correlation, heteroskedasticity, model specification, normality, and multicollinearity. The study suggests several policy recommendations. First, deescalating the civil conflicts and implementing policies towards united and general accepted level of political agreements would attract both domestic and foreign investors which promote exports and domestic production.