Security, Infrastructure Expansion and Regional Economic Integration:The Case for Somalia

Abstract

Somalia joined the East African Community as a full member in March 2024, formalizing a regional market position its geography has long implied. Membership alone does not produce integration. This study examines the short run and long run relationships between security conditions, infrastructure expansion, and regional economic integration in Somalia over the period 2000 to 2023. Security is measured by the World Bank indicator for political stability and absence of violence or terrorism. Infrastructure is separated into physical capacity, measured by access to electricity, and digital connectivity, measured by mobile cellular subscriptions. GDP per capita, inflation, and urban population serve as controls. An Autoregressive Distributed Lag framework is used, which suits a small annual sample containing a mixture of I(0) and I(1) variables. The bounds test indicates a long run levels relationship, and the error correction term is negative and significant. In the long run, mobile subscriptions, inflation, and urban population carry positive coefficients, while political stability, electricity access, and GDP per capita carry negative conditional coefficients. Digital connectivity is the most internally consistent result, positive in the long run and in both the contemporaneous and lagged short run terms, which is plausible in an economy where mobile money is embedded in payments and market coordination. The negative coefficients on stability and electricity access are read as measurement and specification issues rather than substantive findings, since a national security indicator is a weak proxy for risk along particular trade corridors and electricity access records connection coverage rather than reliable supply for logistics, cold chains, or processing. The results support a distinction between nominal integration capacity, meaning the presence of assets conventionally associated with integration, and functional capacity, meaning whether those assets lower the cost and risk of producing, moving, financing, and selling goods across borders.