TITLE:
Estimating the Nexus between Internet Usage and Economic Growth in Somalia: Role of Hormuud Telecom Investment
AUTHORS:
Abdinur Ali Mohamed, Ahmed Ibrahim Nageye
KEYWORDS:
Internet Usage, Economic Growth, Endogenous Growth Theory, Cointegration
JOURNAL NAME:
Modern Economy,
Vol.13 No.9,
September
15,
2022
ABSTRACT: Internet is becoming a driving
force for Somalia’s economic growth, creating jobs and enabling startups to get
funds and communicate value. It is also permitting incumbent
firms to benefit from international trade. This study examines the contribution
of the Internet to Somalia’s economic growth from 1999 to 2020. We measure economic growth by the real GDP growth rate,
while the Internet penetration rate measures internet usage. The variables
exports, imports, investment, and consumption, are considered to influence economic growth in Somalia. The study utilized the
endogenous growth theory to develop an empirical framework, and Generalized
Linear Model (GLM) was employed to
estimate the parameters of the study. The presence of the unit root in
series is tested while cointegration between the variables is examined using
Engle-Granger Method. The results of this study reveal that internet usage positively contributes to economic growth in
Somalia. We also found that consumption is the most significant driver of
economic growth in Somalia, and
international trade has a beneficial impact on the economic growth in Somalia.
The study found evidence that the Internet supports all economic activities in Somalia as it is the means
for communication, information exchange,
and knowledge spillover. This study suggests Internet in Somalia is emerging
and needs vast infrastructure investment. Such investment boosts internet
penetration and reduces the cost of internet usage, which helps Somalia exploit industrial formation.