MILITARY EXPENDITURE AND ECONOMIC GROWTH: A CASE STUDY OF SUB-SAHARAN AFRICAN COUNTRIES (1986-2014)

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ABSTRACT

              This study contributed to the debate on the relationship between military expenditure and economic growth in less-developed economies by investigating the trend; causal relationship and the effect of military expenditure on economic growth in five selected sub-Sahara African Countries namely:- Angola, Cameroon, Kenya, Nigeria and South-Africa; for the period 1986 to 2014. 

              The study employed the Error Correction Mechanism (ECM) using time series data to analyze the effect of military expenditure on economic growth. Granger causality test was used to analyze causal relationship between military expenditure and economic growth. Also, descriptive analysis; graphs was used to analyze the trend pattern in military expenditure in each country. 

              The findings of the study indicated that military spending has a negative and insignificant effect on economic growth (t = -4.30, p < 0.05). Furthermore, the study revealed uni-directional causality which runs from military expenditure to economic growth in sub-Saharan African countries (x2=0.0279, p < 0.05). The study also revealed an upward trend in military expenditure in the five selected countries. A long –run relationship among the variables is also revealed  

              The study concludes that military expenditure is growth retarding in the region. The negative relationship between military expenditure and economic growth implies that the policy makers need to have a greater focus on development spending as compared to military spending.  




TABLE OF CONTENTS

                                                                                                                                            Pages 

Title                                                                                                                                         i 

Authorization to copy                                                                                                             ii

Certification                                                                                                                            iii 

Dedication                                                                                                                               iv 

Acknowledgements                                                                                                                 v 

Table of Contents                                                                                                                    vii 

List of Tables                                                                                                                           x 

List of Figures                                                                                                                          xi

Abstract                                                                                                                                    xii

  

1. INTRODUCTION 

1.1 Background to the Study                                                                                                   1 

1.2 Statement of the Problem                                                                                                  4 

1.3 Research Questions                                                                                                           6 

1.4 Objectives of the Study                                                                                                     7 

1.5 Justification for the Study                                                                                                  7 

1.6 Scope of the Study                                                                                                             8 

2. LITERATURE REVIEW 

2.1  Review of Theoretical Literature                                                                                       9 

2.2 Review of Empirical Literature                                                                                          21 

                                                                                        

3. METHODOLOGY 

3.1 Theoretical Framework                                                                                                       27

3.2 Model Specification                                                                                                            29 

3.3 Source of Data and Measurement of Variables                                                                  34

3.4.Techniques of data analysis                                                                                                35 

4. DATA ANALYSIS AND DISCUSSION  

4.1.1 Descriptive Statistics of the Data                                                                                      37  

4.1.2 Panel Unit Root Test                                                                                                         40 

4.1.3 Lag length selection criteria                                                                                              44 

4.1.4 Panel Co-integration Test                                                                                                  46 

4.2 Trend and pattern of Military Expenditure in selected Sub-Sahara African countries        49

4.2.1 Pooled Trend  of Military Expenditure in selected Sub-Sahara African countries           49

4.2.2 Trend of Military Expenditure in Angola                                                                          53 

4.2.3 Trend of Military Expenditure in Cameroon                                                                     56 

4.2.4 Trend of Military Expenditure in Kenya                                                                           59 

4.2.5 Trend of Military Expenditure in  Nigeria                                                                         62 

4.2.6  Trend of Military Expenditure in South Africa                                                                65

4.3 Direction of causal relationship between Military Expenditure and Economic Growth in Selected Sub-Saharan African Countries                                                                                    68 

4.4 Relationship between Military Expenditure and Economic Growth in the Selected Sub-Saharan African Countries                                                                                                          73                                                                                                                 


5. SUMMARY, CONCLUSION AND RECOMMENDATIONS 

5.1 Summary                                                                                                                                77 

5.2 Conclusion                                                                                                                             79

5.3  Recommendations                                                                                                                 79  

5.4 Contribution to Knowledge and Suggestions for further Research                                       80   

Appendices                                                                                                                                   82  

References                                                                                                                                    87 


 

LIST OF TABLES

Table 4.1: Descriptive Statistics of variables in Logarithm form                                               42 

Table 4.2: Panel Unit Root (with individual intercept)                                                               45

Table 4.3:  Panel Unit Root (with individual intercept and trend)                                              46 

Table 4.4: Lag length selection criterion                                                                                     48  

Table 4.5: Panel Co-integration Test                                                                                           50 

Table 4.6: Individual Cross Section Results                                                                                51 

Table 4.7: VEC Granger Causality/Block Exogeneity Wald Tests                                             67 

Table 4.8: Variance Decomposition                                                                                             70

Table 4.9: Hausman Test                                                                                                              74

Table 4.10: Fixed random effect of military expenditure on economic growth in the selected sub-Saharan African Countries                                                                                                           74


LIST OF FIGURES

Figure 4.1: Trend of Military Expenditure in Sub-Saharan African Countries                            54 

Figure 4.2: Growth Rate of Military Expenditure in Sub-Saharan African                                  55

Figure 4.3: Trend of Military Expenditure in Angola                                                                   57

Figure 4.4: Growth Rate of Military Expenditure in Angola                                                        57

Figure 4.5: Trend of Military Expenditure in Cameroon                                                              59

Figure 4.6: Growth Rate of Military Expenditure in Cameroon                                                   59

Figure 4.7: Trend of Military Expenditure in Kenya                                                                    61

Figure 4.8: Growth Rate of Military Expenditure in Kenya                                                         61

Figure 4.9: Trend of Military Expenditure in Nigeria                                                                   63

Figure 4.10: Growth Rate of Military Expenditure in Nigeria                                                      63

Figure 4.11: Trend of Military Expenditure in South Africa                                                        65

Figure 4.12: Growth Rate of Military Expenditure in South Africa                                             65

Figure 4.13: Impulse Response Graph                                                                                

MILITARY EXPENDITURE AND ECONOMIC GROWTH: A CASE STUDY OF SUB-SAHARAN AFRICAN COUNTRIES (1986-2014)
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  • Type: Project
  • Department: Economics
  • Project ID: ECO1085
  • Access Fee: ₦5,000 ($14)
  • Pages: 107 Pages
  • Format: Microsoft Word
  • Views: 136
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    Type Project
    Department Economics
    Project ID ECO1085
    Fee ₦5,000 ($14)
    No of Pages 107 Pages
    Format Microsoft Word

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