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Empirical Analysis of Military Expenditure and Industrialisation Nexus: A Regional Approach for Africa

Charles Saba () and Nicholas Ngepah ()

International Economic Journal, 2020, vol. 34, issue 1, 58-84

Abstract: This study investigates the impact of military expenditure on industrialisation at regional economic communities of African countries for a balanced panel of 35 African countries between 1990 and 2015. We applied a more recently developed panel causality and Generalised Method of Moments (GMM) estimation techniques. The findings suggest a feedback causality between military expenditure and industrialisation, but with significant differences between military expenditure and other determining variables of industrialisation. The causality results justified the use of System-GMM. The System-GMM results show that military expenditure has: (1) significant positive impact on industrialisation in AMU, CEN-SAD, IGAD, and SADC; (2) insignificant impact in COMESA, ECCAS and ECOWAS regions. The positive impact of military expenditure on industrialisation in the four regions suggests that the military expenditure needed to create a conducive environment for industrialisation process has been relatively effective. While in regions where the impact is insignificant suggests the need for a greater coordinated military spending needed to promote industrialisation process.

Date: 2020
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DOI: 10.1080/10168737.2019.1641541

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Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:58-84