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The Determinants of Foreign Direct Investment in Somalia

Author

Listed:
  • Mohamed Isse Ibrahim

    (Faculty of Economics, SIMAD University, Mogadishu, Somalia)

  • Zahir Mohamed Omar

    (Faculty of Economics, SIMAD University, Mogadishu, Somalia)

  • Ali Yassin Sheikh Ali3

    (Faculty of Economics, SIMAD University, Mogadishu, Somalia)

Abstract

This study examines determinants of foreign direct investment (FDI) in Somalia, measured FDI inflow. Used time series data obtained from World Bank and SESRIC for a period of 41 years that is 1970-2010. Augmented Dickey-Fuller test was used for the unit root test and ordinary least square statistical technique was used to assess the degree of influence the variables have on each other. The results show a negative and significant relationship in exchange rate and FDI, while, a positive and significant relationship is observed between inflation, external debt and domestic investment of FDI. Also a negative but insignificant relationship is observed between lack of government and gross domestic product FDI. Therefore, there is need for the government to retain tight monetary and fiscal policies in order to attract FDI. This study therefore recommends that central bank of Somalia should control the fluctuations of the exchange rate in order to increase the FDI. Since the inflation is higher, the study also recommends having a good government to recover the financial institutions that manage the monetary policy of Somalia.

Suggested Citation

  • Mohamed Isse Ibrahim & Zahir Mohamed Omar & Ali Yassin Sheikh Ali3, 2017. "The Determinants of Foreign Direct Investment in Somalia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 713-720.
    • Handle: RePEc:eco:journ1:2017-03-91
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    References listed on IDEAS

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    Cited by:

    1. Oludayo Elijah Adekunle, 2020. "The Short and Long Run Determinants of Foreign Direct Investment in Nigeria," Management & Economics Research Journal, Faculty of Economics, Commercial and Management Sciences, Ziane Achour University of Djelfa, vol. 2(4), pages 45-65, September.

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    More about this item

    Keywords

    Exchange Rate; Foreign Direct Investments; Somalia;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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