IDEAS home Printed from https://ideas.repec.org/a/bpj/pepspp/v29y2023i4p401-440n6.html
   My bibliography  Save this article

Determinants of Military Spending in Africa: Do Institutions Matter?

Author

Listed:
  • Njamen Kengdo Arsène Aurelien

    (Department of Economics Policy Analysis, Center of Studies and Research in Management and Economics (CERME), Faculty of Economics and Management, University of Dschang, Dschang, Cameroon)

  • Nchofoung Tii N.

    (Department of Economics Policy Analysis, Faculty of Economics and Management, University of Dschang, Dschang, Cameroon)

  • Kos A Mougnol Alice

    (Department of Economics Policy Analysis, Center of Studies and Research in Management and Economics (CERME), Faculty of Economics and Management, University of Dschang, Dschang, Cameroon)

Abstract

This paper focuses on the determinants of military spending in Africa by considering the role played by institutions. With data obtained between the years 1996–2019, the Driscoll and Kraay fixed effects, the Generalised Method of Moments (GMM), and the Bayesian Model Averaging (BMA) estimators are used. The findings suggest that government size, trade freedom, economic risk, and political risk decrease military spending, whereas government stability and military involvement in politics are found to raise it. Using alternative institutional variables, we find that corruption, government effectiveness, political stability, regulatory quality, the rule of law, and voice and accountability significantly diminish military spending in Africa. In addition, concerning the economic determinants, the results reveal that trade openness and total natural resource rents reduce military spending, while GDP per capita, inflation, and foreign debt stocks increase it. Looking at strategic determinants, arms imports, urban population, and ethnic tensions positively affect African military expenditures. Robustness checks show that these results change once regional specificities are considered. The study concludes that institutional factors could be an engine for evolution in Africa’s military spending.

Suggested Citation

  • Njamen Kengdo Arsène Aurelien & Nchofoung Tii N. & Kos A Mougnol Alice, 2023. "Determinants of Military Spending in Africa: Do Institutions Matter?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 29(4), pages 401-440, December.
    • Handle: RePEc:bpj:pepspp:v:29:y:2023:i:4:p:401-440:n:6
    DOI: 10.1515/peps-2023-0014
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/peps-2023-0014
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/peps-2023-0014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Benno J Ndulu & Stephen A O’Connell, 2021. "Africa’s Development Debts [Is Debt Relief Efficient?]," Journal of African Economies, Centre for the Study of African Economies, vol. 30(Supplemen), pages 33-73.
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "How enhancing information and communication technology has affected inequality in Africa for sustainable development: An empirical investigation," Sustainable Development, John Wiley & Sons, Ltd., vol. 27(4), pages 647-656, July.
    3. Sandeep Baliga & David O. Lucca & Tomas Sjöström, 2011. "Domestic Political Survival and International Conflict: Is Democracy Good for Peace?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(2), pages 458-486.
    4. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    5. Kiviet, Jan F., 2023. "Instrument-free inference under confined regressor endogeneity and mild regularity," Econometrics and Statistics, Elsevier, vol. 25(C), pages 1-22.
    6. Nordhaus, William & Oneal, John R. & Russett, Bruce, 2012. "The Effects of the International Security Environment on National Military Expenditures: A Multicountry Study," International Organization, Cambridge University Press, vol. 66(3), pages 491-513, July.
    7. J. Paul Dunne & Nan Tian, 2013. "Military expenditure and economic growth: A survey," Economics of Peace and Security Journal, EPS Publishing, vol. 8(1), pages 5-11, April.
    8. Jorge Carrera & Blaise Gnimassoun & Valérie Mignon & Romain Restout, 2021. "Currency Misalignments and Exchange Rate Regimes in Latin American Countries: A Trade-Off Issue," Annals of Economics and Statistics, GENES, issue 141, pages 71-102.
    9. Magnus, Jan R. & Powell, Owen & Prüfer, Patricia, 2010. "A comparison of two model averaging techniques with an application to growth empirics," Journal of Econometrics, Elsevier, vol. 154(2), pages 139-153, February.
    10. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    11. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    12. Giuseppe De Luca & Jan R. Magnus, 2011. "Bayesian model averaging and weighted-average least squares: Equivariance, stability, and numerical issues," Stata Journal, StataCorp LP, vol. 11(4), pages 518-544, December.
    13. Eftychia Nikolaidou, 2008. "The Demand For Military Expenditure: Evidence From The Eu15 (1961-2005)," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(4), pages 273-292.
    14. Paul Collier & Anke Hoeffler, 2006. "Military expenditure in post-conflict societies," Economics of Governance, Springer, vol. 7(1), pages 89-107, January.
    15. Sèna Kimm Gnangnon & Jean‐François Brun, 2019. "Trade openness, tax reform and tax revenue in developing countries," The World Economy, Wiley Blackwell, vol. 42(12), pages 3515-3536, December.
    16. Nchofoung, Tii N. & Asongu, Simplice A., 2022. "Effects of infrastructures on environmental quality contingent on trade openness and governance dynamics in Africa," Renewable Energy, Elsevier, vol. 189(C), pages 152-163.
    17. Hewitt, Daniel, 1992. "Military Expenditures Worldwide: Determinants and Trends, 1972–1988," Journal of Public Policy, Cambridge University Press, vol. 12(2), pages 105-152, April.
    18. Albalate, Daniel & Bel, Germà & Elias, Ferran, 2012. "Institutional determinants of military spending," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 279-290.
    19. J. Paul Dunne & Sam Perlo-Freeman & Ron Smith, 2008. "The Demand For Military Expenditure In Developing Countries: Hostility Versus Capability," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(4), pages 293-302.
    20. Keele, Luke & Kelly, Nathan J., 2006. "Dynamic Models for Dynamic Theories: The Ins and Outs of Lagged Dependent Variables," Political Analysis, Cambridge University Press, vol. 14(2), pages 186-205, April.
    21. Eftychia Nikolaidou, 2012. "Defence Spending, Economic Growth, Corruption And Inequality," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(6), pages 533-535, December.
    22. Ajide, Kazeem B. & Adenuga, Juliet I. & Raheem, Ibrahim D., 2020. "Natural resource rents, political regimes and terrorism in Africa," International Economics, Elsevier, vol. 162(C), pages 50-66.
    23. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    24. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    25. Gnangnon, Sena Kimm, 2019. "Tax Reform and Trade Openness in Developing Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 34(3), pages 498-519.
    26. Yselle F. Malah Kuete & Simplice A. Asongu, 2023. "Infrastructure Development as a Prerequisite for Structural Change in Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1386-1412, June.
    27. Julien Malizard, 2014. "Dépenses militaires et croissance économique dans un contexte non linéaire. Le cas français," Revue économique, Presses de Sciences-Po, vol. 65(3), pages 601-618.
    28. Jordan Becker & J Paul Dunne, 2023. "Military Spending Composition and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 34(3), pages 259-271, April.
    29. Benoit, Emile, 1978. "Growth and Defense in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 26(2), pages 271-280, January.
    30. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    31. J. Paul Dunne & Ron Smith & Dirk Willenbockel, 2005. "Models Of Military Expenditure And Growth: A Critical Review," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 449-461.
    32. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    33. Jesús Crespo Cuaresma & Gerhard Reitschuler, 2006. "‘Guns Or Butter?’ Revisited: Robustness And Nonlinearity Issues In The Defense–Growth Nexus," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(4), pages 523-541, September.
    34. Veblen, Thorstein, 1904. "Theory of Business Enterprise," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1904.
    35. Jean-Claude Berthélemy & Jean-Paul Azam & Stéphane Calipel & Claude Jessua, 1996. "Risque politique et croissance en Afrique," Revue Économique, Programme National Persée, vol. 47(3), pages 819-829.
    36. Christos Kollias & Nikolaos Mylonidis & Suzanna-Maria Paleologou, 2007. "A Panel Data Analysis Of The Nexus Between Defence Spending And Growth In The European Union: A Reply," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 581-583.
    37. Leah M. Cook & Alicia H. Munnell, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
    38. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    39. Tobignaré Yabré & Gervasio Semedo & Idrissa M. Ouédraogo, 2019. "Stabilité du gouvernement et ajustement budgétaire de pays d’Afrique subsaharienne," Revue française d'économie, Presses de Sciences-Po, vol. 0(4), pages 25-69.
    40. Maria Elena Bontempi & Irene Mammi, 2015. "Implementing a strategy to reduce the instrument count in panel GMM," Stata Journal, StataCorp LP, vol. 15(4), pages 1075-1097, December.
    41. Indra De Soysa & Eric Neumayer, 2008. "Disarming Fears of Diversity: Ethnic Heterogeneity and State Militarization, 1988—2002," Journal of Peace Research, Peace Research Institute Oslo, vol. 45(4), pages 497-518, July.
    42. Christos Kollias & Suzanna-Maria Paleologou, 2019. "Military spending, economic growth and investment: a disaggregated analysis by income group," Empirical Economics, Springer, vol. 56(3), pages 935-958, March.
    43. Maizels, Alfred & Nissanke, Machiko K., 1986. "The determinants of military expenditures in developing countries," World Development, Elsevier, vol. 14(9), pages 1125-1140, September.
    44. J. Paul Dunne & Sam Perlo-Freeman, 2003. "The demand for military spending in developing countries: A dynamic panel analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(6), pages 461-474.
    45. J. Paul Dunne & Nan Tian, 2015. "Military Expenditure, Economic Growth and Heterogeneity," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(1), pages 15-31, February.
    46. Christos Kollias & Nikolaos Mylonidis & Suzanna-Maria Paleologou, 2007. "A Panel Data Analysis Of The Nexus Between Defence Spending And Growth In The European Union," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(1), pages 75-85.
    47. John Paul Dunne & Eftychia Nikolaidou, 2012. "Defence Spending And Economic Growth In The Eu15," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(6), pages 537-548, December.
    48. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    49. Mr. Daniel P. Hewitt, 1991. "Military Expenditure: Econometric Testing of Economic and Political Influences," IMF Working Papers 1991/053, International Monetary Fund.
    50. M. Hashem Pesaran, 2015. "Testing Weak Cross-Sectional Dependence in Large Panels," Econometric Reviews, Taylor & Francis Journals, vol. 34(6-10), pages 1089-1117, December.
    51. Valerie A. Ramey, 2011. "Can Government Purchases Stimulate the Economy?," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 673-685, September.
    52. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    53. Uk Heo & Min Ye, 2016. "Defense Spending and Economic Growth around the Globe: The Direct and Indirect Link," International Interactions, Taylor & Francis Journals, vol. 42(5), pages 774-796, October.
    54. Hou Na & Chen Bo, 2014. "Military Spending and Economic Growth in An Augmented Solow Model: A Panel Data Investigation for OECD Countries," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(3), pages 395-409, August.
    55. Carlos Seiglie, 2016. "Openness of the economy, terms of trade, and arms," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 748-759, January.
    56. Paul Collier & Anke Hoeffler, 2007. "Unintended Consequences: Does Aid Promote Arms Races?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 1-27, February.
    57. Chien-Chiang Lee & Sheng-Tung Chen, 2007. "Non-Linearity In The Defence Expenditure - Economic Growth Relationship In Taiwan," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 537-555.
    58. Yoosoon Chang & Wonho Song, 2002. "Panel Unit Root Tests in the Presence of Cross-Sectional Dependency and Heterogeneity," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B5-2, International Conferences on Panel Data.
    59. Aurelien, Njamen Kengdo Arsene & Nchofoung, Tii Njivukuh & Marcel, Takoulac Kamta & Jean-Claude, Kouladoum, 2019. "Non-linear effect of military spending on economic growth in Africa: A comparative study between stable and unstable countries," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 9(2), pages 195-215.
    60. Syed Mansoob Murshed & Dawood Mamoon, 2010. "Not loving thy neighbour as thyself: Trade, democracy and military expenditure explanations underlying India—Pakistan rivalry," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(4), pages 463-476, July.
    61. Paul Dunne & Eftychia Nikolaidou & Dimitrios Vougas, 2001. "Defence spending and economic growth: A causal analysis for Greece and Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 12(1), pages 5-26.
    62. Töngür, Ünal & Hsu, Sara & Elveren, Adem Yavuz, 2015. "Military expenditures and political regimes: Evidence from global data, 1963–2000," Economic Modelling, Elsevier, vol. 44(C), pages 68-79.
    63. Jianqing Fan & Yuan Liao & Jiawei Yao, 2015. "Power Enhancement in High‐Dimensional Cross‐Sectional Tests," Econometrica, Econometric Society, vol. 83(4), pages 1497-1541, July.
    64. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
    65. Droff Josselin & Julien Malizard, 2022. "Determinants of Defense Spending: The Role of Strategic Factors in France," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(8), pages 938-955, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ally, Zawadi & Kingu, John, 2024. "The Dynamics of Political Stability and Military Expenditure on Economic Growth: Insights from Tanzania," African Journal of Economic Review, African Journal of Economic Review, vol. 12(3), September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kelly, Arsene Mouongue & Ngo Nguéda Radler, Romaine Doline, 2024. "Does energy consumption matter for climate change in Africa? New insights from panel data analysis," Innovation and Green Development, Elsevier, vol. 3(3).
    2. Charles Shaaba Saba & Nicholas Ngepah, 2019. "Military expenditure and economic growth: evidence from a heterogeneous panel of African countries," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 3586-3606, January.
    3. Chletsos Michael & Roupakias Stelios, 2020. "The effect of military spending on income inequality: evidence from NATO countries," Empirical Economics, Springer, vol. 58(3), pages 1305-1337, March.
    4. Christos Kollias & Suzanna-Maria Paleologou, 2016. "Investment, growth, and defense expenditure in the EU15: Revisiting the nexus using SIPRI’s new consistent dataset," Economics of Peace and Security Journal, EPS Publishing, vol. 11(2), pages 28-37, October.
    5. Dimitrios Karamanis, 2022. "Defence partnerships, military expenditure, investment, and economic growth: an analysis in PESCO countries," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 173, Hellenic Observatory, LSE.
    6. Töngür, Ünal & Hsu, Sara & Elveren, Adem Yavuz, 2015. "Military expenditures and political regimes: Evidence from global data, 1963–2000," Economic Modelling, Elsevier, vol. 44(C), pages 68-79.
    7. Ünal Töngür & Adem Yavuz Elveren, 2017. "The nexus of economic growth, military expenditures, and income inequality," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1821-1842, July.
    8. Albalate, Daniel & Bel, Germà & Elias, Ferran, 2012. "Institutional determinants of military spending," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 279-290.
    9. Unal Tongur & Sara Hsu & Adem Yavuz Elveren, 2013. "Military Expenditures and Political Regimes: An Analysis Using Global Data, 1963-2001," ERC Working Papers 1307, ERC - Economic Research Center, Middle East Technical University, revised Jul 2013.
    10. Vusal Musayev, 2016. "Externalities in Military Spending and Growth: The Role of Natural Resources as a Channel through Conflict," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(3), pages 378-391, June.
    11. Shreesh Chary, 2023. "The nexus between arms imports, military expenditures and economic growth of the top arms importers in the world: a pooled mean group approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 51(4), pages 808-822, August.
    12. Gbolonyo, Emmanuel Y. & Ofori, Isaac K. & Ojong, Nathanael, 2024. "Does Economic Complexity Promote Inclusive Green Growth," EconStor Preprints 298785, ZBW - Leibniz Information Centre for Economics.
    13. Hou Na & Chen Bo, 2014. "Military Spending and Economic Growth in An Augmented Solow Model: A Panel Data Investigation for OECD Countries," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(3), pages 395-409, August.
    14. Musayev, Vusal, 2013. "Military Spending and Growth: An Empirical Exploration of Contingent Relationships," MPRA Paper 59783, University Library of Munich, Germany.
    15. Christos Kollias & Suzanna-Maria Paleologou, 2019. "Military spending, economic growth and investment: a disaggregated analysis by income group," Empirical Economics, Springer, vol. 56(3), pages 935-958, March.
    16. Kyriakos Emmanouilidis & Christos Karpetis, 2022. "Cross–Country Dependence, Heterogeneity and the Growth Effects of Military Spending," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(7), pages 842-856, October.
    17. Alessandra Cepparulo & Paolo Pasimeni, 2024. "Defence Spending in the European Union," European Economy - Discussion Papers 199, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    18. Charles Shaaba Saba & Nicholas Ngepah, 2019. "A cross-regional analysis of military expenditure, state fragility and economic growth in Africa," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(6), pages 2885-2915, November.
    19. Sèna Kimm Gnangnon, 2023. "Trade costs and tax transition reform in developing countries," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 941-977, October.
    20. Tsangyao Chang & Chien-Chiang Lee & Hsiao-Ping Chu, 2015. "Revisiting the Defense-Growth nexus in European countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(3), pages 341-356, June.

    More about this item

    Keywords

    determinants; military spending; institutions;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:pepspp:v:29:y:2023:i:4:p:401-440:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.