The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches
Addressing income disparity is essential to attaining long-term economic development and social fairness, especially in unstable governments, such as Somalia. This assessment, which investigates the period from 1980 to 2022—a period marked by significant political, economic, and social transitions—p...
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2528444 |
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| author | Abdi Majid Yusuf Ibey Abdikadir Ahmed Mohamed Abdikani Yusuf Abdulle Mahdi Mohamed Omar |
| author_facet | Abdi Majid Yusuf Ibey Abdikadir Ahmed Mohamed Abdikani Yusuf Abdulle Mahdi Mohamed Omar |
| author_sort | Abdi Majid Yusuf Ibey |
| collection | DOAJ |
| description | Addressing income disparity is essential to attaining long-term economic development and social fairness, especially in unstable governments, such as Somalia. This assessment, which investigates the period from 1980 to 2022—a period marked by significant political, economic, and social transitions—provides fresh insights into the dynamics of income inequality in Somalia, an area that has received little attention in earlier research. Using ARDL and NARDL models, this study examines the symmetric and asymmetric impacts of foreign direct investment (FDI), trade openness, and foreign aid on income inequality. The findings reveal that trade openness is associated with lower income inequality, with positive shocks narrowing disparities and negative shocks worsening them in both the short and long term. In contrast, foreign aid and FDI show no significant effect. Long-run inequality is significantly worsened by GDP per capita, inflation, and urbanization, while short-term effects are either insignificant or marginal. The study’s results highlight the need for targeted policies supporting trade openness with protections, encouraging sustainable urbanization, and adopting inclusive economic growth measures to minimize inequality. This study offers a comprehensive framework for policymakers to promote sustainable urban development, inclusive inflation control, and effective FDI and aid management, while tailoring growth strategies to ensure equity, redistribution, and reduced income inequality. |
| format | Article |
| id | doaj-art-237f9d5a1f1d455781df9d17da9ef5ca |
| institution | DOAJ |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-237f9d5a1f1d455781df9d17da9ef5ca2025-08-20T03:13:22ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2025.2528444The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approachesAbdi Majid Yusuf Ibey0Abdikadir Ahmed Mohamed1Abdikani Yusuf Abdulle2Mahdi Mohamed Omar3Faculty of Economics and Management, Jamhuriya University of Science and Technology, Mogadishu, SomaliaFaculty of Economics and Management, Jamhuriya University of Science and Technology, Mogadishu, SomaliaFaculty of Economics and Management, Jamhuriya University of Science and Technology, Mogadishu, SomaliaFaculty of Economics and Management, Jamhuriya University of Science and Technology, Mogadishu, SomaliaAddressing income disparity is essential to attaining long-term economic development and social fairness, especially in unstable governments, such as Somalia. This assessment, which investigates the period from 1980 to 2022—a period marked by significant political, economic, and social transitions—provides fresh insights into the dynamics of income inequality in Somalia, an area that has received little attention in earlier research. Using ARDL and NARDL models, this study examines the symmetric and asymmetric impacts of foreign direct investment (FDI), trade openness, and foreign aid on income inequality. The findings reveal that trade openness is associated with lower income inequality, with positive shocks narrowing disparities and negative shocks worsening them in both the short and long term. In contrast, foreign aid and FDI show no significant effect. Long-run inequality is significantly worsened by GDP per capita, inflation, and urbanization, while short-term effects are either insignificant or marginal. The study’s results highlight the need for targeted policies supporting trade openness with protections, encouraging sustainable urbanization, and adopting inclusive economic growth measures to minimize inequality. This study offers a comprehensive framework for policymakers to promote sustainable urban development, inclusive inflation control, and effective FDI and aid management, while tailoring growth strategies to ensure equity, redistribution, and reduced income inequality.https://www.tandfonline.com/doi/10.1080/23322039.2025.2528444Income inequalitytrade opennessFDIforeign aidautoregressive distributed lag (ARDL)non-linear ARDL |
| spellingShingle | Abdi Majid Yusuf Ibey Abdikadir Ahmed Mohamed Abdikani Yusuf Abdulle Mahdi Mohamed Omar The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches Cogent Economics & Finance Income inequality trade openness FDI foreign aid autoregressive distributed lag (ARDL) non-linear ARDL |
| title | The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches |
| title_full | The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches |
| title_fullStr | The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches |
| title_full_unstemmed | The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches |
| title_short | The symmetric and asymmetric impact of trade openness, FDI, foreign aid on income inequality in Somalia: evidence from the ARDL and non-linear ARDL approaches |
| title_sort | symmetric and asymmetric impact of trade openness fdi foreign aid on income inequality in somalia evidence from the ardl and non linear ardl approaches |
| topic | Income inequality trade openness FDI foreign aid autoregressive distributed lag (ARDL) non-linear ARDL |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2025.2528444 |
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