Investigating the influence of humanitarian and development assistance on sustainable agricultural output in Somalia

Abstract

In recent decades, foreign aid inflow in Somalia has increased. Yet, agricultural production and gross domestic product (GDP) are stagnant and have not made any tangible improvement. Therefore, this raises questions about the effectiveness of foreign aid in boosting agricultural productivity. To achieve this goal, this study assesses the role of total foreign aid, humanitarian aid, and development aid in Somalia’s agricultural production. We utilized an autoregressive distributed lag (ARDL) cointegration method with annual time series spanning 1989–2019. In the long run, total aid is not cointegrated with agricultural production in Somalia, according to empirical results. But humanitarian and development aid are cointegrated to agricultural production in the long run. Moreover, development aid has a constructive role in enhancing agricultural production in the long run, whereas humanitarian aid is inconsequential in the long run. These results are robust for different estimation methods. Based on the empirical findings, the study suggests that policymakers and donors strengthen their efforts to increase development aid. The development aid should be directed to the productive sectors, such as investing in agriculture equipment, infrastructure development, and human capital development, as these areas would have a positive impact on agriculture productivity.