The Dairy Sector, Macroeconomic Shocks, and Food Security in Libya: An Econometric Analysis in a Rentier Economy (1990–2024)
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Food Security, Dairy Sector, Domestic Production, Exchange Rate, Rentier Economy, Libya, ARDL
Abstract
This study aims to analyze the long-run and short-run relationship between national food security in Libya and each of domestic dairy production, dairy imports, the exchange rate, and oil prices, within a framework that accounts for the specificity of the rentier economy and its reliance on external financing for food imports. The Autoregressive Distributed Lag (ARDL) model was applied to annual data for the period 1990–2024. The results revealed a strong cointegrating relationship among the variables. Domestic dairy production exhibited the largest estimated elasticity among the statistically significant variables in the long run, while oil prices were positively associated with food security, consistent with the role of oil revenues in supporting the economy's financial capacity. In contrast, dairy imports showed no statistically significant effect, suggesting that increasing imports alone is insufficient to achieve food security in the absence of a productive domestic sector capable of meeting demand and a stable economic environment. The study concludes that achieving food security in Libya requires reorienting policies towards developing domestic production, enhancing exchange rate stability, and utilizing oil revenues in agricultural investment.
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