Military Expenditure and the Growth of Nigerian Economy

Abstract

This study aims to examine the relationship between military expenditure and economic growth in Nigeria from 1970 to 2018, using the ARDL vector error correction mechanism. The variables in this study include Real Gross Domestic Product (RGDP), Government Expenditure on Fixed Capital Formation, Community and Social Services, Defense, Education, and Population. The findings, with RGDP as the dependent variable, indicate a long-run cointegrating relationship among these variables. The findings indicate a cointegrating relationship among the variables, with Defense as the dependent variable. The vector error correction analysis reveals that when RGDP is considered as the dependent variable in the first and third periods, there is a positive and significant relationship with its own lagged value, suggesting that changes in RGDP during these periods stimulate growth. However, government expenditure on defense shows a positive and significant effect only in the third lagged period, while its relationship to growth in the second and third lagged periods is negative and insignificant. Overall, this suggests that government investment in defense does not have a significant impact on growth in Nigeria. Therefore, it is recommended that the government exercises caution when considering increases in military expenditure.