Economic Activity, International Intervention, and Transitional Governance: A Comparative Case Study of Somalia

This paper investigates the impact of international state-building efforts on economic development in Somalia. Due to non-existent or poor-quality national income accounts, we use satellite data capturing night light emissions to measure economic activity. Using the synthetic control method, we find that the establishment of the Transitional Federal Government in 2004 was associated with economic stagnation relative to the years prior, where Somalia did not have a formal government. This result of economic stagnation remains whether we use the total lights emitted from the country or the spread of lights across the country. Our empirical findings are consistent with the idea that the exogenously imposed Transitional Federal Government destabilized the country through an incongruity with the informal institutions that had led to development during Somalia’s `statelessness.’