Growth and Fiscal Effects of Insecurity on the Nigerian Economy

Abdulkarim Yusuf () and Saidatulakmal Mohd ()
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Abdulkarim Yusuf: Universiti Sains Malaysia (USM)
Saidatulakmal Mohd: Universiti Sains Malaysia (USM)

The European Journal of Development Research, 2023, vol. 35, issue 4, No 1, 743-769

Abstract: Abstract In spite of government counter-terrorism expenditure and efforts, the prevalence of insecurity in Nigeria appears to be rising and fast evolving into an existential crisis that is shaking the foundation of its nationhood. The current study used annual time-series data from 1980 to 2019 and the ARDL methodology to analyse the fiscal and socio-economic consequences of insecurity on economic growth in Nigeria. The empirical findings demonstrated that high unemployment rate, domestic capital formation, foreign direct investment, government spending on education and security are negatively affected by the growing level of insecurity and consequently retarded growth in the long and short run. Conversely, improved health services, equitable income distribution and productive use of public borrowing were positively correlated with security and, therefore, stimulated growth in the long and short run. Government revenue and inflation rate accelerated growth in the long run whereas their short-run effect was deleterious. The findings suggest that good governance, provision of a safe and secured environment for human capital development and businesses, improved access to social and economic services will curb violent tendencies, create jobs, reduce poverty, increase government revenue and engender long-term inclusive growth.

Keywords: Bound test to co-integration; Bad governance; Economic growth; Enablers of insecurity; Terrorism Index; Nigeria; Security spending; Unit root (search for similar items in EconPapers)
JEL-codes: C32 E31 H56 O40 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1057/s41287-022-00531-3

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