Assessing the effects of macroeconomic factors on food production in Somalia

Somalia’s prolonged institutional fragility, high reliance on food imports, and exposure to macroeconomic volatility make it a distinctive case for examining the macroeconomic determinants of food production. This paper aims to investigate the impact of macroeconomic variables on food production in Somalia, using annual time series data from the World Development Indicators and FOASTAT, spanning from 1991 to 2021. The macroeconomic factors such as inflation, real GDP per capita, exchange rates, food exports, agricultural land, and agricultural labor on food production. This study specifically seeks to analyze the long-term and short-term relationships between food production and these key macroeconomic variables in Somalia using an Autoregressive Distributed Lag (ARDL) model. Additionally, the study employs Johansen cointegration, dynamic least squares (DOLS), and Granger causality tests to explore predictive relationships among the variables. The study’s findings indicate the existence of a long-term relationship among the variables. In the long run, Inflation is negatively associated with food production, while GDP per capita, exchange rate movements, food exports, agricultural land, and agricultural labor are positively associated with food production. Furthermore, unidirectional causality is observed from exchange rates to food production, from food production to real GDP per capita and agricultural labor, and from food exports to exchange rates. Building on these insights, the study recommends prioritizing the implementation of effective economic policies aimed at curbing inflation and boosting GDP growth, as such measures can enhance food production in Somalia and contribute to greater economic stability and food production.