The role of macroeconomic factors in shaping employment trends in Somalia
Abdikadir Ahmed Mohamed, Abdikani Yusuf Abdulle, Mahdi Mohamed Omar
Abstract
Somalia has one of the most severe unemployment rates globally, due to its economic instability. Our study focuses on the macroeconomic effects on employment using an ARDL model. The key macroeconomic variables examined are GDP, inflation, FDI, foreign aid, and population growth, with data sourced from the World Bank spanning 32 years, from 1991 to 2022. The study found that GDP positively affects employment in both the short and long run. Inflation shows a positive correlation with employment in the short run but a negative effect but insignificant in the long run. FDI has a positive effect in the long run and a negative, insignificant effect in the short run. Foreign aid positively impacts employment in both the short and long run, though the effect is not significant in the latter. the study recommends policies to sustain economic growth, manage population growth, stabilize prices, and improve aid management to enhance employment opportunities in Somalia.