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