A Comparative Study on Trade Relation of BRICS Countries with Somalia

Abstract

The objective of the paper is to study the trade relation of BRICS Countries with Somalia. It has found that Somalia has the trade deficit with all the BRICS member countries. Large trade deficit of the country is the big challenge before the government. Somalia has historical and religious ties to the Arab world. Somalia was an important trade center. Somalia's main exports are livestock, bananas, hides and skins, fish, charcoal and scrap metal. Its main export partners are the UAE, Yemen and Oman. Trade Intensity Index shows that Somalia has strong trade relation with United Arab Emirates, Ethiopia, and India. The Trade Complementarity Index value shows that export profile of Somalia is not matches the import profile from BRICS countries. Somalia has higher Herfindahl-Hirschman Index with United Arab Emirates and Ethiopia. It means Somalia export more selected products to United Arab Emirates and Ethiopia than the BRICS countries. Logistic Performance Index shows the poor transport infrastructure and facilities in Somalia. Somalia faced the negative consequences of decades of armed conflict, social and political instability and climate change. Somalia is very vulnerable to natural and external shocks, including malfunctions and safety of natural disasters, supply chains. Therefore, government should implement policies for growing export and establishing import substitute industries.  It will reduce pressure on precious foreign currency reserves and trade deficits.