Paper Title
The Role of Foreign Aid on Economic Growth in Somalia

Abstract
The integration of developing countries with the global economy increased sharply in the 1990s with changing in their economic policies and lowering of barriers to trade and investment. Foreign Aid is assumed to benefit a poor country like Somalia, not only by supplementing domestic Investment, but also in terms of employment creation, transfer of technology, increased domestic Competition and other positive externalities. This paper focuses on the foreign aid –led growth hypothesis in the case of Somalia. The data used for this study has spanned over the period of 1985 till 2018. Besides AID, three other variables including, FDI, import, export, to regress upon Real GDP of this country. The Cobb-Douglas production function is applied in the model. The study used econometric tests under Ordinary Least Squares method, Johansen co Integration test and VAR analysis to examine the role of international trade on economic growth. The methodology to test the impact of these variables on Somalia economic growth has been the least squares method. Unit root test has been applied to test the stationary of the variables FA is found to be stationary at first difference while all other variables are stationary at second difference. The co-integration of the variables has been ascertained through application ofAugmented Dickey Fuller Test and hence is found to hold in the long run. The error correction model is used to capture both the long run and the short run information. The statistical package for the analysis used is Views. Our findings indicate that Somali economic performance is positively affected by foreign direct investment but is not significant. Moreover, the nation’s, trade have found to have negative impact on its GDP. Following the results and previous studieson the subject this paper recommends: One important policy objective should be to reduce thebarriers to foreign aid effectiveness is to build a diversified economy through investment inhuman capital and infrastructure and productive capacity. Finally the Government should aim atattracting specific types of aid that are able to generate spillover effects in the overall economy Keywords - Foreign Aid, Export, Economic Growth, Somalia.