Does military spending nonlinearly affect economic growth in South Africa?

Andrew Phiri

MPRA Paper from University Library of Munich, Germany

Abstract: Using annual data collected from 1988 to 2014, this study provides evidence of a nonlinear relationship between military spending, economic growth and other growth determinants for the South African economy. The empirical study is based on estimates of a logistic smooth transition regression (LSTR) model and our empirical results point to an inverted U-shaped relationship between military spending and economic growth for the data. Furthermore, our empirical results suggest that the current levels of military spending, as a component of total government expenditure, are too high in the South African economy and need to be transferred towards more productive non-military expenditure in order to improve the performance of economic growth and other growth determinants.

Keywords: Military expenditure; Non-military expenditure; Economic growth; Investment; Labour, Exports; South Africa; Sub-Saharan Africa; Developing country; Smooth transition regression (STR) model. (search for similar items in EconPapers)
JEL-codes: C32 H56 O40 (search for similar items in EconPapers)
Date: 2016-02-26
New Economics Papers: this item is included in nep-gro
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69730

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