Military Expenditure, Institutional Quality and Economic Growth in Nigeria

  • Adewale Atanda Oyerinde University of Lagos
  • Damilola Gabriel Fagboro University of Lagos
Keywords: Institutional Quality, Military Expenditure, Economic growth

Abstract

The study investigates the nexus between military expenditure, institutional quality and Nigerian economic growth between 1984 and 2017. Variables such as military expenditure, corruption index as a proxy for institutional quality and growth rate as measure of Nigerian economic growth are included in the model. Other variables used as control are investment, population and macroeconomic variables such as exchange rate and inflation rate. Auto-Regressive Distributed Lag (ARDL) approach is applied and the result shows that there exists a long run relationship between military expenditure, institutional quality and Nigerian economic growth. The result further shows that there exists a positive and significant relationship between military expenditure and Nigerian economic growth but institutional quality in Nigeria was found to have significant negative impact on economic growth while the interaction between military expenditure and institutional quality also indicates a significant negative impact on Nigerian economic growth. It is recommended that military expenditure in Nigeria should be moderately reduced and institutions in Nigeria should monitor its disbursement  to ensure that it is spent on what is actually meant  for.

References

Aizenman, J. & Glick, R. (2006). Military expenditure, threats, and growth. Journal of International Trade & Economic
Development, 15, 129-155.
Anifowose, O. L. (2019). Military Expenditure and Institutional Quality on BRICS Countries Inclusive Growth Based on World
Bank Income Classification. Acta Universitatis Danubius. Œconomica, 15 (3), 20-39.
Anifowose, O., Omolade, A. and Mukorera, S. (2019) Determinants of Military Expenditures in the BRICS countries. Acta
Universitatis Danubius Œconomica (Financial Economics), 15 (4), 165-190.
Apanisile, O. T. & Okunola, O.C. (2014). Empirical analysis of effects of military spending on economic growth in Nigeria: A
bound testing approach to co-integration 1989-2013. Journal of Public Administration, Finance and Law, 6, 117-130.
Barro, R. J. (1990). Government spending in a simple model of endogeneous growth. Journal of Political Economy, 98 (5), Part
2, S103-S125.
Barro, R.J. & Sala-I-Martin, X. (1992). Public Finance in Models of Economic Growth. The Review of Economic Studies, 59 (4),
645-661.
Berggren, N., Bergh, A., & Bjørnskov, C. (2013). Institutions, Policies and Growth in Europe: Quality versus Stability: Swedish
Institute for European Policy Studies (SIEPS).
Biswas, B. (1992). Defence spending and economic growth in developing countries. Economic Research Institute Study
Papers, Paper 18.
Biswas, B. & Ram, R. (1986). Military expenditures and economic growth in less developed countries: An augmented model
and further evidence. Economic Development and Cultural Change, 34, 361-372.
Benoit, E. (1973). Defense and economic growth in developing countries. Lexington, MA: Lexington Books.
Benoit, E. (1978). Growth and defense in developing countries. Economic Development and Cultural Change, 26 (2), 271-280.
Dunne, P. & Nikolaidou, E. (2001). Military expenditure and economic growth: A demand and supply model for Greece, 1960-
1996. Defence and Peace Economics, 12 (1), 47-67.
Dunne, P. & Perlo-Freeman, S. (2003). The demand for military spending in developing countries. International Review of
Applied Economics, 17 (1), 23-48.
Dunne, P. & Vougas, D. (1999). Military spending and economic growth in South Africa: A causal analysis. The Journal of
Conflict Resolution, 43 (4), 521-537.
Gujarati, D. N. & Porter, D. C. (2009). Basic Econometrics, 5th ed. New York: Micgraw-Hill Inc.
Khalid, M. A. & Noor, Z. M. (2015). Military expenditure and economic growth in developing countries: evidence from system
GMM estimates. Journal of Emerging Trends in Economics and Nanagement Sciences, 6(1), 31-39.
Klein*, T. (2004). Military expenditure and economic growth: Peru 1970–1996. Defence and Peace Economics, 15 (3), 275-
288.
Knight, M., Loayza, N. & Villanueva, D. (1996). The peace dividend: military spending cuts and economic growth. Staff papers,
43, 1-37.
Kolawole, B. O. (2016). Government spending and inclusive-growth relationship in Nigeria: An empirical investigation. Zagreb
International Review of Economics and Business, 19 (2), 33-56.
Lee, C. C. & Chang, C. P. (2005). Structural breaks, energy consumption and economic growth revisited: Evidence from Taiwan.
Energy Economics, 27 (6), 857-872.
Muhammed, U. A. & Abu, S. A. B. (2016). The interactional impact of defense expenditure and arms importation on economic
growth in Nigeria: An autoregressive approach. International Journal of Economics and Financial Issues, 6 (2), 538-543.
North Atlantic Treaty Organisation (NATO) (2017). Defence Expenditure of NATO Countries (2010-2017). A Press release by
the Public Diplomacy Division Ref. PR/CP(2017)111 of 29 June.
Obasi, C. N., Asogwa, F. O. & Nwafee, F. I. (2018). Military expenditure and human capital development in Nigeria. American
Journal of Economics, 8(5), 221-229.
Omolehinwa, E. O. & Naiyeju, J. K. (2018). Government Accounting in Nigeria: An IPSAS Approach, 2nd Edition. Lagos, Nigeria:
Pumark Nigeria Limited.

Ramos, R. A., Ranieri, R., & Lammens, J. (2013). Mapping inclusive growth. IPC-IG Working Paper, 105.
Sezgin, S. (2001). An empirical analysis of Turkey's defense-growth relationship with a multi equation model (1956-1994).
Defence and Peace Economics, 12 (1) (Special Issue on Economic Aspects of Defense in Turkey and Greece), 69-86.
Tambudzai, Z. (2011). Determinants of military expenditure in Zimbabwe. Economics of Peace and Security Journal, 6 (2), 41-
49.
Valeriani, E. & Peluso, S. (2011). The impact of institutional quality on economic growth and development: An empirical study.
Journal of Knowledge Management, Economics and Information Technology, 1, 1-25.
Zhao, L., Zhao, L. & Chen, B.F. (2017). The interrelationship between defence spending, public expenditures and economic
growth: evidence from China. Defence and Peace Economics, 28 (6), 703-718.
Published
2020-05-29
How to Cite
Oyerinde , A. A., & Fagboro, D. G. (2020). Military Expenditure, Institutional Quality and Economic Growth in Nigeria. Global Journal of Accounting, 6(1), 41-52. Retrieved from http://ujp.unilag.edu.ng/index.php/gja/article/view/872
Section
Articles