The Impact of Foreign Trade on Sustainable Development in the Libyan Economy: An Applied Study (1990–2022)
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Sustainable Development, Foreign Trade Volume, Model ARDL, Libya
Abstract
This study critically examines the short- and long-term linkages between foreign trade volume (TVR) and sustainable development (SD) in Libya’s unique post-conflict, resource-dependent economy over the period 1990–2022. Utilising autoregressive distributed lag (ARDL) modelling, it assesses TVR’s impact on Hickel’s Sustainable Development Index (SDI) a holistic metric that goes beyond GDP by integrating crucial environmental and human well-being indicators. The results reveal a positive long-term cointegration between TVR and the SDI, primarily driven by associated growth in GDP and GDP per capita. However, this relationship remains fragile, as persistent inflation and high unemployment significantly undermine sustainability gains. Libya’s structural overreliance on hydrocarbons and chronic macroeconomic instability are identified as the core impediments to balanced progress. The study recommends a strategic pivot towards diversifying exports, stabilising macroeconomic conditions, and implementing fair labour policies to better align trade growth with the Sustainable Development Goals (SDGs). Prioritising inflation control and fostering inclusive employment are paramount to enhancing Libya’s SDI resilience.
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