Authors: Abdimalik Abdukadir Mohamed
Abstract: This article looks at how political disagreements between Somalia's federal government and its states affected the economy from 2012 to 2023. Using a mix of methods, including statistical analysis (difference-in-differences and synthetic control) and interviews with 84 key figures, the study measures the effect of these conflicts on economic growth (GDP per capita), foreign investment, government revenue, and how effectively humanitarian aid was used.The statistical analysis shows that when federal-state conflicts increased by a certain amount, annual real GDP growth dropped by 1.9%, and foreign investment decreased by about $47 million each quarter. The synthetic control analysis suggests that if the disputes hadn't happened after 2012, Somalia's economy per person would have been 22–28% larger by 2023.Looking at data from five states, the impact wasn't the same everywhere. Regions with resources like Puntland and areas with frequent conflict like South West State showed the biggest economic differences. The interviews highlighted three ways these conflicts hurt the economy: confusing rules, making investors unsure, and diverting aid money away from where it's needed. These factors made the economic damage worse than just the direct disruption from the conflicts.This research adds to the growing studies on how federal systems work after conflicts in sub-Saharan Africa. It also provides practical suggestions for resolving constitutional disputes and designing better fiscal agreements.
DOI: https://doi.org/10.5281/zenodo.24098419
