Skip to main content

Advertisement

SpringerLink
Log in

A cross-regional analysis of military expenditure, state fragility and economic growth in Africa

  • Published:
Quality & Quantity Aims and scope Submit manuscript

Abstract

This study investigates the relationship between military expenditure, state fragility and economic growth at regional economic communities of African countries. With a balanced panel of 34 African countries spanning 1990–2015. The variables of interest for this study include military expenditure, state fragility and economic growth. To measure economic growth, real gross domestic product per capita serves as the proxy, while state fragility is measured by the state fragility index, and military expenditure by military expenditure as a percentage share of GDP. We utilise: panel causality and cointegration test; and the generalised method of moments (GMM) estimation techniques. The causality results suggest a feedback relationship among our variables of interest and this justified the use of GMM. Our analysis suggests that the effect of military expenditure on growth is negative at Africa level with significant regional economic level differences, and this effect is influenced in the presence of state fragility. This imply that there exist complementary effects between military expenditure and state fragility on growth. A cut in military expenditure and a consideration of other means of dealing with fragility issues as an alternative to joint regional militarised intervention of regional governments of African countries is recommended.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. Please note that the keywords for military expenditure include defence expenditure, defence spending, military spending, military expenditure and defence burden. Keywords for growth include economic growth, economic development, GDP and real gross domestic product per capita.

  2. Interested readers are referred to Dumitrescu and Hurlin (2012) methodological framework for more details.

  3. Interested readers are referred to Arellano and Bond (1991), Arellano and Bover (1995), and Blundell and Bond’s (1998) for more details.

  4. Interested readers are referred to Dunne et al. (2005) for the details of the theoretical framework and mathematical presentation for the MILEX and economic growth models.

References

  • Abu-Bader, S., Abu-Qarn, A.S.: Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria. J. Policy Mod. 25, 567–583 (2003)

    Article  Google Scholar 

  • Aizenman, J., Glick, R.: Military expenditure, threats, and growth (No. w9618). Nat. Bur. Econ. Research (2003)

  • Alemu, A.M.: The impacts of ethnic, linguistic and religious fractionalization on state fragility in Africa. J. Mark. Manag. 7(2), 47–66 (2016)

    Google Scholar 

  • An, C.: Causality of defense spending and economic growth based on Lag-Augmented VAR Model. J. Univ. South China 12(2), 33–36 (2011)

    Google Scholar 

  • Arellano, M., Bond, S.: Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev. Econ. Stud. 58, 277–297 (1991)

    Article  Google Scholar 

  • Arellano, M., Bover, O.: Another look at the instrumental variable estimation of error-components models. J. Econom. 68, 29–51 (1995)

    Article  Google Scholar 

  • Baliamoune-Lutz, M.: Institutions, trade, and social cohesion in fragile states: implications for policy conditionality and aid allocation. J. Policy Model. 31, 877–890 (2009)

    Article  Google Scholar 

  • Baum, C.F., Schaffer, M.E., Stillman, S.: Instrumental variables and GMM: estimation and testing. Stata J. 3(1), 1–31 (2003)

    Article  Google Scholar 

  • Benoit, E.: Defense and Growth in Developing Countries. Lexington Books, Boston (1973)

    Google Scholar 

  • Benoit, E.: Growth and defense in developing countries. Econ. Dev. Cult. Change 26, 271–280 (1978)

    Article  Google Scholar 

  • Bertocchi, G., Guerzoni, A.: The fragile definition of state fragility. Riv. Ital. Degli Econ. 16, 339–356 (2011)

    Google Scholar 

  • Bertocchi, G., Guerzoni, A.: Growth, history, or institutions: what explains state fragility in sub-Saharan Africa? J. Peace Res. 49, 769–783 (2012)

    Article  Google Scholar 

  • Besley, T., Persson, T.: State capacity, conflict, and development. Econometrica 78, 1–34 (2010)

    Article  Google Scholar 

  • Besley, T., Persson, T.: Fragile states and development policy. J. Eur. Econ. Assoc. 9, 371–398 (2011)

    Article  Google Scholar 

  • Besley, T., Robin, B.: Halving global poverty. J. Econ. Perspect. 17(3), 3–22 (2003)

    Article  Google Scholar 

  • Biswas, B.: Defense spending and economic growth in developing countries. In: Payne, J.E., Sahu, A.P. (eds.) Defense Spending and Economic Growth, pp. 223–235. Westview Press, Boulder (1993)

    Google Scholar 

  • Blundell, R., Bond, S.: Initial conditions and moment restrictions in dynamic panel data models. J. Econ. 87, 115–143 (1998)

    Article  Google Scholar 

  • Breitung, J.: The local power of some unit root tests for panel data. In: Nonstationary Panels, Panel Cointegration, and Dynamic Panels, pp. 161–177. Emerald Group Publishing Limited (2001)

  • Breitung, J., Das, S.: Panel unit root tests under cross-sectional dependence. Stat. Neerl. 59, 414–433 (2005)

    Article  Google Scholar 

  • Carment, D., Samy, Y., Prest, S.: State fragility and implications for aid allocation: an empirical analysis. Confl. Manag. Peace Sci. 25, 349–373 (2008)

    Article  Google Scholar 

  • Chang, H.C., Huang, B.N., Yang, C.W.: Military expenditure and economic growth across different groups: a dynamic panel Granger-causality approach. Econ. Model. 28, 2416–2423 (2011)

    Article  Google Scholar 

  • Chauvet, L., Collier, P., Hoeffler, A.: The cost of failing states and the limits to sovereignty. In: Fragile States: Causes, Costs and Responses, pp. 91–110 (2007)

  • Churchill, S.A., Yew, S.L.: The effect of military expenditure on growth: an empirical synthesis. Empir. Econ. 55(3), 1357–1387 (2018)

    Article  Google Scholar 

  • Coulomb, F., Bellais, R.: The Marxist analysis of war and military expenditures, between certainty and uncertainty. Def. Peace Econ. 19, 351–359 (2008)

    Article  Google Scholar 

  • d’Agostino, G., Dunne, J.P., Pieroni, L.: Corruption, military spending and growth. Def. Peace Econ. 23, 591–604 (2012)

    Article  Google Scholar 

  • d’Agostino, G., Dunne, J.P., Pieroni, L.: Government spending, corruption and economic growth. World Dev. 84, 190–205 (2016)

    Article  Google Scholar 

  • d’Agostino, G., Dunne, J.P., Pieroni, L.: Military expenditure, endogeneity and economic growth. Def. Peace Econ. 29, 1–16 (2018)

    Article  Google Scholar 

  • David, O.O.: Powering economic growth and development in Africa: telecommunication operations. Appl. Econ. 55(33), 1–25 (2019)

    Google Scholar 

  • Desli, E., Gkoulgkoutsika, A., Katrakilidis, C.: Investigating the dynamic interaction between military spending and economic growth. Rev. Dev. Econ. 21, 511–526 (2017)

    Article  Google Scholar 

  • Destek, M.A.: Is the causal nexus of military expenditures and economic growth asymmetric in G-6. J. Appl. Res. Finance Econ. 1, 1–8 (2016)

    Article  Google Scholar 

  • Dumitrescu, E.I., Hurlin, C.: Testing for Granger non-causality in heterogeneous panels. Econ. Model. 29(4), 1450–1460 (2012)

    Article  Google Scholar 

  • Dunne, P., Coulomb, F.: Peace, war and international security: economic theories. In: War, Peace and Security, pp. 13–36. Emerald Group Publishing Limited (2008)

  • Dunne, J.P., Mohammed, N.A.: Military spending in sub-Saharan Africa: some evidence for 1967–85. J. Peace Res. 32, 331–343 (1995)

    Article  Google Scholar 

  • Dunne, J.P., Tian, N.: Military expenditure and economic growth: a survey. Econ. Peace Secur. J. 8(1), 5–11 (2013)

    Google Scholar 

  • Dunne, J.P., Tian, N.: Military expenditure and economic growth, 1960–2014. Econ. Peace Secur. J. 11(2), 50–56 (2016)

    Google Scholar 

  • Dunne, J.P., Uye, M.: Military spending and development. The global arms trade. Routledge, London (2010)

    Google Scholar 

  • Dunne, J.P., Nikolaidou, E., Smith, R.: Military spending, investment and economic growth in small industrialising economies. S. Afr. J. Econ. 70, 789–790 (2002)

    Article  Google Scholar 

  • Dunne, J.P., Smith, R.P., Willenbockel, D.: Models of military expenditure and growth: a critical review. Def. Peace Econ. 16, 449–461 (2005)

    Article  Google Scholar 

  • Feeny, S., Posso, A., Regan-Beasley, J.: Handle with care: fragile states and the determinants of fragility. Appl. Econ. 47(11), 1073–1085 (2015)

    Article  Google Scholar 

  • Ferreira, I.A.: An empirical analysis of state fragility and growth: the impact of state ineffectiveness and political violence (No. 2018/29). WIDER Working Paper (2018)

  • Fosu, A.K.: Growth, inequality, and poverty reduction in developing countries: recent global evidence. Res. Econ. 71(2), 306–336 (2017)

    Article  Google Scholar 

  • Furuoka, F., Oishi, M., Karim, M.A.: Military expenditure and economic development in China: an empirical inquiry. Def. Peace Econ. 27, 137–160 (2016)

    Article  Google Scholar 

  • Gokmenoglu, K.K., Taspinar, N., Sadeghieh, M.: Military expenditure and economic growth: the case of Turkey. Procedia Econ. Finance 25, 455–462 (2015)

    Article  Google Scholar 

  • Gottheil, Fred M.: Marx versus marxist on the role military production in capitalists economies. J. Post Keynesian Econ. 89, 379–399 (1986)

    Google Scholar 

  • Heo, U., Ye, M.: Defense spending and economic growth around the globe: the direct and indirect link. Int. Interact. 42(5), 774–796 (2016)

    Article  Google Scholar 

  • Hou, N., Chen, B.: Military expenditure and economic growth in developing countries: evidence from system GMM estimates. Def. Peace Econ. 24(3), 183–193 (2013)

    Article  Google Scholar 

  • Im, K.S., Pesaran, M.H., Shin, Y.: Testing for unit roots in heterogeneous panels. J. Econ. 115(1), 53–74 (2003)

    Article  Google Scholar 

  • Jalil, A., Abbasi, H.K.N., Bibi, N.: Military expenditures and economic growth: allowing structural breaks in time series analysis in the case of India and Pakistan. Qual. Quant. 50, 1487–1505 (2016)

    Article  Google Scholar 

  • Kalwij, A., Verschoor, A.: Not by growth alone: the role of the distribution of income in regional diversity in poverty reduction. Eur Econ. Rev. 51(4), 805–829 (2007)

    Article  Google Scholar 

  • Kalyoncu, H., Yucel, F.: An analytical approach on defense expenditure and economic growth: the case of Turkey and Greece. J. Econ. Stud. 33(5), 336–343 (2006)

    Article  Google Scholar 

  • Kentor, J., Kick, E.: Bringing the military back in: military expenditures and economic growth 1990 to 2003. J. World Syst. Res. 14, 142–172 (2008)

    Article  Google Scholar 

  • Kollias, C., Paleologou, S.M.: Military spending, economic growth and investment: a disaggregated analysis by income group. Empir. Econ. 56(3), 935–958 (2019)

    Article  Google Scholar 

  • Kollias, C., Manolas, G., Paleologou, S.M.: Defence expenditure and economic growth in the European Union: a causality analysis. J. Policy Model. 26, 553–569 (2004)

    Article  Google Scholar 

  • Kollias, C., Paleologou, S.M., Tzeremes, P., Tzeremes, N.: Defence expenditure and economic growth in Latin American countries: evidence from linear and nonlinear causality tests. Latin Am. Econ. Rev. 26(1), 2 (2017)

    Article  Google Scholar 

  • Lai, C.N., Huang, B.N., Yang, C.W.: Defense spending and economic growth across the Taiwan straits: a threshold regression model. Def. Peace Econ. 16, 45–57 (2005)

    Article  Google Scholar 

  • Levin, A., Lin, C.F., Chu, C.S.J.: Unit root tests in panel data: asymptotic and finite-sample properties. J. Econ. 108, 1–24 (2002)

    Article  Google Scholar 

  • Loayza, N., Knight, M., Villanueva, D.: The peace dividend: military spending cuts and economic growth. The World Bank (1999)

  • Maier, R.: Growth and equity in fragile states, p. 41. http://www.clingendael.nl/cru (2010)

  • OECD: Concepts and dilemmas of state building in fragile situations: from fragility to resilience. J. Dev. 9(2), 60–149 (2009)

    Google Scholar 

  • Phiri, A.: Does military spending nonlinearly affect economic growth in South Africa? Def. Peace Econ. 28, 1–14 (2017)

    Article  Google Scholar 

  • Pieroni, L.: Military expenditure and economic growth. Def. Peace Econ. 20(4), 327–339 (2009)

    Article  Google Scholar 

  • Ram, R.: Conceptual linkages between defense spending and economic growth and development: a selective review. In: Defence Spending and Economic Growth, pp. 19–39. Westview, Oxford (1993)

  • Riddle, T.: Marxism and military spending. J. Post Key. Econ. 8, 574–580 (1986)

    Article  Google Scholar 

  • Shahbaz, M., Afza, T., Shabbir, M.S.: Does defence spending impede economic growth? Cointegration and causality analysis for Pakistan. Def. Peace Econ. 24, 105–120 (2013)

    Article  Google Scholar 

  • SIPRI: https://www.sipriorg/sites/default/files/Trends-in-international-arms-transfers-2016pdf (2017)

  • Tiwari, A.K., Shahbaz, M.: Does defence spending stimulate economic growth in India? A revisit. Def. Peace Econ. 24, 371–395 (2013)

    Article  Google Scholar 

  • UNDP: Human Development Report 2011: Sustainability and Equity: A Better Future for All. UNDP, New York (2012)

    Google Scholar 

  • Vallings, C., Moreno-Torres, M.: Drivers of fragility: what makes states fragile? PRDE working paper no. 7. http://webarchive.nationalarchives.gov.uk/þ/http://www.dfid.gov.uk/documents/publications/fragilestates/drivers-fragility.pdf (2005)

  • World Bank: http://databank.worldbank.org/data/source/world-development-indicators# (2015)

  • Yang, A.J., Trumbull, W.N., Yang, C.W., Huang, B.N.: On the relationship between military expenditure, threat, and economic growth: a nonlinear approach. Def. Peace Econ. 22, 449–457 (2011)

    Article  Google Scholar 

  • Yolcu Karadam, D., Yildirim, J., Öcal, N.: Military expenditure and economic growth in Middle Eastern countries and Turkey: a non-linear panel data approach. Def. Peace Econ. 28, 719–730 (2017)

    Article  Google Scholar 

  • Zaman, K.: Does higher military spending affect business regulatory and growth specific measures? Evidence from the group of seven (G-7) countries. Econ Politica 36(1), 323–348 (2019)

    Article  Google Scholar 

  • Zhao, L., Zhao, L., Chen, B.F.: The interrelationship between defence spending, public expenditures and economic growth: evidence from China. Def. Peace Econ. 28, 703–718 (2017)

    Article  Google Scholar 

  • Zhong, M., Chang, T., Tang, D.P., Wolde-Rufael, Y.: The causal nexus between military spending and unemployment in the G7: a bootstrap panel causality test. Def. Peace Econ. 26, 609–622 (2015)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Economics, College of Business and Economics, University of Johannesburg, Auckland Park Kingsway Campus, PO Box 524, Auckland Park, Johannesburg, South Africa

    Charles Shaaba Saba & Nicholas Ngepah

Authors
  1. Charles Shaaba Saba
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Nicholas Ngepah
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Charles Shaaba Saba.

Ethics declarations

Conflict of interest

The author(s) declared no potential conflict of interest with respect to the research, authorship, and/or publication of this article.

Additional information

Publishers Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

See Tables 7, 8, 910, 11, 12 and 13.

Table 11 Optimum lag length selection results.
Full size table
Table 12 List of selected African countries
Full size table
Table 13 Africa’s Regional Economic Blocks for the study
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Saba, C.S., Ngepah, N. A cross-regional analysis of military expenditure, state fragility and economic growth in Africa. Qual Quant 53, 2885–2915 (2019). https://doi.org/10.1007/s11135-019-00905-6

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11135-019-00905-6

Keywords

JEL Classification

Search

Navigation