scholarly journals Guns versus Butter: An Analysis of the Impact of Military Spending on Economic Growth in a Low-income Country: A Case of Uganda 1970-2018

2021 ◽  
Author(s):  
james mukoki ◽  
John B Oryema ◽  
James Wokadala
Keyword(s):  
Economic Growth ◽  
National Security ◽  
Low Income ◽  
Public Expenditure ◽  
Private Investment ◽  
Military Expenditure ◽  
External Threats ◽  
Defense Expenditure ◽  
Long Run ◽  
The Impact

Abstract Background: As part of public expenditure, empirical studies on the impact of military/defense expenditure on the economic growth, particularly in the case of a developing country like Uganda remain still abstruse to both policymakers, researchers, and academicians. There is a scanty agreement in this regard today. For the case of Uganda, a country that has had a fair share of its instabilities and wars, the subject of military expenditure and national security becomes a topic of national importance. And although the country has registered some progress in economic growth, hovering at around 5% annually, its military expenditure as a percentage of GDP has also been raising at an average of 2.5%, and it is projected to continue rising if the present uncertainty in the country remains unabated. Thus, in this study, a time series model is estimated to analyze the association between military/defense expenditure (as % of GDP) and economic growth in Uganda for the period 1970 through 2019. By employing the augmented Solow growth model parameterized through the ARDL model, we test the impact of military expenditure on economic growth in Uganda for both short and long-run scenarios.Results: The findings are indicative that military expenditure does affect economic growth in Uganda although the effect is not significant. Also, the impact of security-related factors such as military expenditure by the neighbors, election year, and conflict type on growth rates seem to be mixed in both short and long-run scenarios. In addition the results reveal that a percentage point change in the level and first lag of military expenditure (Milex) is associated with 0.30 and 2.81 percentage point reduction in GDP growth in Uganda. A similar result is reported in (Islam, 2015; Saba and Ngepah, 2019). However, the impact of military expenditure on the economy has been uncertain depending on the role of the expenditure, for instance, according to (D’Agostino et al., 2012) military expenditure can be growth-enhancing if it is meant to create a peaceful environment for businesses to thrive but it can be detrimental if such expenditure is to finance external wars and internal conflicts, where productive resources like labor and capital are lost thus affecting growth. Conclusion: Several take-home points emerge especially on public expenditure regarding the military versus other productive sectors. For instance governments in developing countries should keenly watch over their respective defense budgets and should thus allocate financial resources in tandem with both internal and external threats to the national security of their countries but also in line with resources allocated to other productive investment sectors like health, education and food productivity, such as agricultural sector in case of Uganda which seem to have direct multiplier growth effects. Besides reduction in military expenditure will avoid the crowding-out effect of productive private investment by government. For the case of Uganda, if such alarming defense expenditures are left unabated, Uganda’s previously registered rates of growth may either stagnate or even deteriorate. Thus an urgent solution is needed. JEL Code: E62 & H5

The Impact of Military Spending on Economic Development

2018 ◽  
pp. 182-191
Author(s):  
Saptarshi Chakraborty
Keyword(s):  
Economic Growth ◽  
Causal Effect ◽  
Large Fraction ◽  
Military Spending ◽  
Military Expenditure ◽  
Policy Debate ◽  
External Threats ◽  
The Cost ◽  
The Military ◽  
The Impact

Some countries spend a relatively large percentage of GDP on their militaries in order to preserve or secure their status as global powers. Others do so because they are ruled by military governments or aggressive regimes that pose a military threat to their neighbors or their own populations. It is debatable whether there is a causal relationship between military spending and economic growth in the economy. It is again a policy debate how much to allocate funds for civilian and how much for military expenditure. Under these puzzling results of the impact of military expenditure on economic growth which is frequently found to be non-significant or negative, yet most countries spend a large fraction of their GDP on defense and the military. The chapter tries to investigate the relationship between military spending and economic growth in India. It also sees whether external threats, corruption, and other relevant controls have any causal effect. This chapter obtains that additional expenditure on Indian military in the presence of additional threat is significantly detrimental to growth implying that India cannot afford to fight or demonstrate power at the cost of its development.

Impact of Public and Private Infrastructure Investment on Economic Growth: Evidence from India

2020 ◽  
Vol 12 (2) ◽  
pp. 119-138
Author(s):  
Nishija Unnikrishnan ◽  
Thomas Paul Kattookaran
Keyword(s):  
Economic Growth ◽  
Public Investment ◽  
Impulse Response Function ◽  
Decomposition Analysis ◽  
Private Investment ◽  
Infrastructure Investment ◽  
Public Infrastructure ◽  
Public And Private ◽  
Long Run ◽  
The Impact

Literature presents contradictory views regarding the impact of public and private investment on the economic growth of a country. India being a developing country, where the major share of investment is by public sector, the question which props up is what among public and private investment is contributing more towards the economic growth of the country. In this framework, the gross domestic product (GDP) can be fairly explained as a function of public infrastructure investment and private infrastructure investment. Johansen’s co-integration was used to test the long-run relationship between the variables over the period from 1961–1962 to 2016–2017. A vector error correction model (VECM) along with an impulse response function and variance decomposition analysis was done to measure the impact of public infrastructure investment and private infrastructure investment on the GDP. Based on the empirical evidence discussed earlier, it was evident that both public and private infrastructure investments have a significant impact on the economic growth of the nation. Findings which came up in this study correlate to majority findings of past literature that, when compared with public investment, it is private investment which is capable of giving a better impetus to economic growth.

scholarly journals Military Expenditure and Economic Growth Empirical Evidence from Malaysia

2019 ◽  
Vol 8 (2S9) ◽  
pp. 1-5
Keyword(s):  
Economic Growth ◽  
Negative Relationship ◽  
Military Expenditure ◽  
Policy Makers ◽  
Long Run ◽  
Job Opportunities ◽  
The Impact ◽  
The Relationship ◽  
Domestic Products ◽  
Defence Expenditure

The relationship between military expenditure and economic growth has attract ample interest among economists as well as policy makers. The importance of expanding defence expenditure is substantially to coincide with national security and defence. The purpose of this study is to explore the impact of military expenditure on economic growth in Malaysia. An econometrics time series analysis is employed using ARDL estimates spanning from the year 1979 to 2017. The empirical findings reveal a negative relationship between military expenditure and Gross Domestic Products (GDP). Despite the inverse relationship between defence expenditure and economic growth, Malaysia should not neglect the investment on efficient military expenditure, as it has proven that in some countries, defence expenditure promotes a long run economic growth by promoting more job opportunities, protecting the nation and thus, achieving sustainable development. It is recommended to add more variables in future study that can relate security and defence for the country like numbers of crime, and numbers of migrants and refugees. Conclusively defence and security are the important factors for the country in generating the world and public’s confidence and to captivate foreign direct investment. Hence, adequate policy making on military expenditure are utmost important to promote economic growth

Relationship Between Military Expenditure, Economic Growth, and Social Expenditure in India, China, and Bangladesh

2018 ◽  
pp. 285-306
Author(s):  
Rajib Bhattacharyya
Keyword(s):  
Economic Growth ◽  
Health Expenditure ◽  
Military Expenditure ◽  
Social Expenditure ◽  
Educational Expenditure ◽  
Distributed Lag ◽  
Defense Expenditure ◽  
Long Run ◽  
Short Run ◽  
Growth Changes

One of the most debated phenomena of recent times in the global scenario is whether there really exists a true opportunity cost of a sequential increase in global military expenditure across the world. The existing literature on the relationship between military expenditure and economic growth confirms that three kinds of linkages may be plausible: positive, negative, and no significant linkages. The chapter focuses on contradictions and conflicts between military expenditure and social expenditure such as health and education. The chapter also attempts to examine both the long-run and short-run relationship between defense expenditure (DE), health expenditure (HE), educational expenditure (EE), and economic growth (changes in GDP). Here the autoregressive distributed lag approach (ARDL) and error correction model (ECM) technique have been applied to examine the long- and short-run causality among the variables. The study observes that there exists no significant long-term relationship between economic growth, defense expenditure, health expenditure, and educational expenditure in India and China, but Bangladesh does have one.

Defense Expenditure and Economic Performance in SAARC Countries

2018 ◽  
pp. 46-58
Author(s):  
Sudhansu Sekhar Mahapatra ◽  
Madhabendra Sinha ◽  
Anjan Ray Chaudhury ◽  
Abhijit Dutta ◽  
Partha Pratim Sengupta
Keyword(s):  
Economic Growth ◽  
Economic Performance ◽  
Public Life ◽  
Defense Spending ◽  
Internal Security ◽  
External Threats ◽  
Defense Expenditure ◽  
External Relationships ◽  
The Impact ◽  
The Relationship

Governments in most of the nations aim to fulfil their requirements and protect themselves with the necessities of public life from the external threats, and also try to separate a significant portion for defense-related spending from the budget. But the impact of defense expenditures on economic growth is not apparent. It deserves an empirical investigation to explore the external effect of defense spending on the economic performance of the country. The authors choose six SAARC countries, namely Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka, where defense-related issues regarding internal security as well as external relationships with neighbor countries are the most significant to examine the relationship between defense expenditures and economic performance measured by GDP growth. The method of GMM estimation is applied in a dynamic panel structure of selected countries over the period 1970-2016. Empirical findings show that, besides some possible factors, defense spending has a positive and significant impact on economic growth in SAARC member nations.

An Empirical Re-examination

2017 ◽  
Vol 9 (1) ◽  
pp. 36-48 ◽  
Author(s):  
Onyinye I. Anthony-Orji ◽  
Anthony Orji ◽  
Jonathan E. Ogbuabor ◽  
Emmanuel Nwosu
Keyword(s):  
Economic Growth ◽  
Public Expenditure ◽  
Positive Impact ◽  
Statistical Significance ◽  
Research Work ◽  
Private Investment ◽  
Capital Formation ◽  
Oil Export ◽  
The Government ◽  
The Impact

The current decline in global oil prices and the attendant economic distortions it has caused in many oil-dependent economies, such as Nigeria, have become a cause of concern to researchers and economic managers alike. This research work, therefore, investigates the impact of non-oil export (NOIL) on capital formation and economic growth in Nigeria. It adopts a classical linear macroeconomic model using aggregate data time series from 1980 to 2013. Empirical results from the estimated model show that NOIL has a positive impact on capital formation and economic growth in Nigeria, respectively. However, the level of statistical significance differs between capital formation and economic growth. The study, therefore, recommends that there is a need for diversification of the economy as this will go a long way in boosting the growth of the Nigerian economy. Furthermore, the government should create an enabling environment that will ensure the survival and functioning of the ailing industries in order to diversify the economy. Finally, the problem of infrastructural deficits (water supply, transport system, telecommunication and energy) should be tackled by massive public expenditure and private investment, as this will enhance productivity in the non-oil sectors.

scholarly journals PRIVATE SECTOR INVESTMENT AND ECONOMIC GROWTH IN PALESTINE

2018 ◽  
Vol 5 (1) ◽  
Author(s):  
Osaid Nasser Abdaljawwad ◽  
Tamat Sarmidi
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Private Sector ◽  
Unit Root ◽  
Time Series Data ◽  
Private Investment ◽  
Series Data ◽  
Private Sector Investment ◽  
Long Run ◽  
The Impact

This study examines the impact of private sector investment on economic growth in Palestine using quarterly time series data from 1990-2015. Multiple regression and co-integration methods are employed to analyse the data. The objectives of this study are to analyse the trends of private investment and economic growth in Palestine from 1990­-2015 and to examine the impact of private sector investment on economic. Being a time series data, to avoid spurious regression results, the first step is to test for the stationarity of the data by using Augmented Dickey-Fuller unit root test. Then ordinary least square (OLS) regression technique is used to estimate of each independent variable effect on the dependent variable. Test the stationary of the error term is done to test the long run co-integration among variables. The result of stationarity and normality test will reveal that the model is fairly well specified and could be used for policy analysis or not. The co-integration test result will indicate that private sector investment and economic growth have a long run significant effect on one another. The unit root tests, which conducted, confirm that variables are stationary in first difference and the co-integration tests also confirm the existence of long term relationship between the variables. The findings of the study concluded that there exist a short-run and long run relationship between private sector investment and economic growth in Palestine. This study recommends the Palestinian government to promote and encourage both domestic and foreign direct investment. The investment policy should be more transparent, attractive and competitive

The Impact of Workers’ Remittances on Private Investment and Total Consumption in Pakistan

2011 ◽  
Vol 1 (1) ◽  
pp. 152 ◽  
Author(s):  
Kausar Yasmeen ◽  
Ambreen Anjum ◽  
Kashifa Yasmeen ◽  
Sidra Twakal
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
Time Series Data ◽  
Private Investment ◽  
Developed Countries ◽  
Least Square ◽  
Low Income Countries ◽  
Series Data ◽  
Total Consumption ◽  
The Impact

To check the two Objectives of the study one exploring the impact of work remittance on economic growth and second is Impact of work remittance on private investment and total consumption, 25 years’ time series data collected from the Economic survey of Pakistan for the time 1984-2009. The methodology used for the analysis, is Regression model so for regression we have used OLS (ordinary least square model).the work remittance has positively related with the Private investment and total consumption which results increase in GDP and economic growth of Pakistan. This research favor the study of Burki (1991),Ahmad(1986), Charless (1989) Adam(1998) and Darry (2005) this research may be helpful for other low income countries, they can analysis the Workers’ remittances impact on Private investment and Total consumption  of their countries to encourage the workers remittance. Developing countries may request to developed countries to soft police for work remittance in favor of their countries. This might boost their TC and PI which boost up the economy.

Analysis of Stock Market Development, Foreign Private Investment and Economic Growth in Nigeria

2018 ◽  
Vol 10 (1-2) ◽  
pp. 1-17
Author(s):  
Onyinye I. Anthony-Orji ◽  
Anthony Orji ◽  
Jonathan E. Ogbuabor
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Private Investment ◽  
Least Square ◽  
Market Development ◽  
Stock Market Development ◽  
Long Run ◽  
Stock Market Performance ◽  
Foreign Private Investment ◽  
The Impact

The study estimated the impact of stock market development and foreign private investment on economic growth in Nigeria over the period of 1985–2016, using secondary data from various publications of the Central Bank of Nigeria. The ordinary least square (OLS) technique was employed in this study, while the Engel and Granger co-integration approach was applied to determine the long-run relationship between the variables. The result showed that market capitalisation, all share index and real exchange rate have statistically significant impact on economic growth, while foreign direct investment, trade openness and gross national savings have insignificant impact on growth. The study also showed that there is a long-run relationship among stock market development, foreign private investment and economic growth in Nigeria. The error correction model (ECM) results showed that the model adjusts to equilibrium in the short run and that about 51 per cent of the disequilibrium between gross domestic product and the independent variables is corrected each year. The study recommended that policymakers and monetary authorities should gear efforts towards formulating policies that will fine-tune stock market performance and reduce issues, such as, unpaid dividends, delay in dividend payments and unhealthy transfer of stocks. This is pertinent to encourage greater population of the citizenry to invest in the stock market. Finally, the study concluded that provision and improvement of infrastructure and power as well as enforcement of investor-friendly policies by the government is needed as these will encourage the establishment of more firms and industries that will participate in the stock market, thereby contributing to the growth of the economy. JEL Classification: E22, F21, F43, O16

Sign in / Sign up

Export Citation Format

Share Document