Revisiting the Military Expenditure-Growth Nexus: Does Institutional Quality Moderate the Effect?

James Dada, Awoleye Emmanuel Olayemi, Arnaut Marina and Mamdouh Abdulaziz Sa Al-Faryan
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Awoleye Emmanuel Olayemi: Economics, Hallmark University, Ijebu Itele, Ijebu, Ogun, Nigeria
Arnaut Marina: University of Dubai, Dubai, United Arab Emirates

Peace Economics, Peace Science, and Public Policy, 2023, vol. 29, issue 1, 19-42

Abstract: The purpose of this study is to examine the moderating role and threshold level of institutional quality in the nexus between military expenditure and economic growth for a panel of 31 African nations. The results reveal that military expenditure negatively influences growth, while institutional quality positively affects growth. The interactive term of institutional quality and military expenditure significantly positively influence economic growth. However, the threshold level of institutional quality for military expenditure to translate into economic growth in the region is found to be 4.61 on an ordinary scale of 0–10, although most countries operate below the threshold point of institutional quality. The study concludes that strong institutional quality serves as important absorptive capacity for military expenditure to drive economic growth in the region.

Keywords: military expenditure; economic growth; institutional quality; Africa; threshold (search for similar items in EconPapers)
JEL-codes: H50 H56 O47 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/peps-2022-0027

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