The Impact of Economic, Climatic, and Institutional Shocks on Food Security in Libya: An Econometric Analysis Using the SVAR Model (1990–2022)

Abstract

Libya suffers from a stark paradox characterized by abundant oil revenues alongside persistent fragility in food security, importing over 90% of its basic food needs. This study aimed to analyze the structural causes of this deficit by assessing the impact of economic, climatic, and institutional shocks on agricultural GDP, as an indicator of food availability, during the period 1990–2022. The methodology employed a Structural Vector Autoregression (SVAR) model to measure the effects of shocks in key variables, including agricultural expenditure and investment, exchange rates, irrigated areas, and oil revenues. Results from Impulse Response Functions (IRFs) revealed that economic shocks, particularly exchange rate depreciation and inefficient government spending, contributed to weakening agricultural performance in the medium and long term. In contrast, irrigated areas emerged as the sole critical factor with a positive effect on enhancing sustainable agricultural growth. Granger causality analysis further indicated that these effects occur through delayed time cycles rather than being instantaneous. The study concludes that Libya's food security crisis stems from structural imbalances rather than a mere lack of resources. It recommends reorienting policies towards investing in modern irrigation systems, linking expenditure to measurable performance indicators, and establishing a sovereign fund to support local production. This approach is essential for building a resilient production base capable of achieving food security in the face of climatic and economic challenges.