How does the International Business Effected on Economic Growth of Somalia

Abstract

The purpose of this study was to establish the impact of foreign trade on economic growth of Somalia. The study was guided by the following specific objectives: to determine the impact of exports on economic growth of Somalia, to investigate the impact of imports on economic growth of Somalia. The study was guided by the theory of comparative advantage, the theory of absolute advantage as well as the neoclassical theory of growth. Correlation research design involving quantitative methods was adopted. Secondary data was collected from World Bank on exports, imports, custom taxes, total tax revenue and gross domestic product as well as the GDP growth rates covering the period of 1960 to 2020. Descriptive statistics covering means and standard deviation, linear and multiple regression analysis were adopted. The findings indicated that exports (r=0.483, β=.324, p1.96) as well as imports (r=.378, β=.069, p1.96) have positive and significant impact on economic growth of Somalia. The study concludes that foreign trade has significant impact on economic growth of Somalia.