Nexus between defence spending, economic growth and development: evidence from a disaggregated panel data analysis

Charles Shaaba Saba, Nicholas Ngepah

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)

Abstract

This study investigates the causal effect relationship between defence spending, economic growth and development in three regions for the period 1990–2018. It further estimates the trivariate impacts of defence spending, growth and development in three regions. To measure growth, we used real gross domestic product as the proxy, while economic development was measured by the Human Development Index. The empirical results suggest the existence of a bidirectional long-run relationship between defence spending, economic growth and development in the entire sample and the three regions of sub-Saharan Africa, the Middle East and North Africa, and Latin America and the Caribbean countries. The causality results reveal that there is feedback causality between defence spending, economic growth and development. There is thus a need to promote holistic policies to reduce the defence spending necessary for the enhancement of inclusive economic growth and development in these three regions. A decrease in defence spending in the three regions will encourage aggregate output and the standard of living to increase, and move simultaneously in the same direction.

Original languageEnglish
Pages (from-to)109-151
Number of pages43
JournalEconomic Change and Restructuring
Volume55
Issue number1
DOIs
Publication statusPublished - Feb 2022
Externally publishedYes

Keywords

  • Defence spending
  • Economic growth and development
  • Panel causality
  • Panel cointegration
  • Panel vector autoregressive (PVAR)

ASJC Scopus subject areas

  • Economics and Econometrics

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