IDEAS home Printed from https://ideas.repec.org/a/pal/palcom/v10y2023i1d10.1057_s41599-023-01916-3.html
   My bibliography  Save this article

Military spending crowding out health and education spending: which views are valid in Egypt?

Author

Listed:
  • Eman Elish

    (The British University in Egypt)

  • Hossam Eldien Ahmed

    (The British University in Egypt)

  • Mostafa E. AboElsoud

    (The British University in Egypt
    Suez Canal University)

Abstract

This study examines the relationship between government spending, specifically military spending, government spending on health, government spending on education, and economic growth in Egypt over the period from 1980 to 2021. The paper utilizes a Granger causality test to detect the directional relationship between spending components and GDP growth. Furthermore, an autoregressive distributed lag (ARDL) model, including error-correction models, was established to determine the long- and short-term relationships among these variables. The study contrasts Wagner’s versus Keynes’s views of the government spending relationship with economic growth, with a greater emphasis on Keynes’s argument for military spending enhancing economic growth. While previous studies have investigated the relationship between aggregate spending and economic growth from a single or two-way direction of causality, the present study contributes to the literature by exploring the possibility of military spending crowding out spending on health and education and detecting this causality and dynamic relationship. The empirical results support the Keynesian view of causality from all government spending components to economic growth. However, short- and long-term analyses revealed a negative relationship between military spending and economic growth. Moreover, the short-term impact of government spending on education and health on economic growth is negative, but positive in the long-term. Finally, the causality test revealed that military spending influences health and education spending. Additionally, a unidirectional relationship exists between military spending and health expenditure, which requires further research. The policy implication of this study shows that although spending is exogenous to economic growth, it does not align with the Keynesian view of inducing growth. Instead, spending has negative current and future implications for economic development.

Suggested Citation

  • Eman Elish & Hossam Eldien Ahmed & Mostafa E. AboElsoud, 2023. "Military spending crowding out health and education spending: which views are valid in Egypt?," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    • Handle: RePEc:pal:palcom:v:10:y:2023:i:1:d:10.1057_s41599-023-01916-3
    DOI: 10.1057/s41599-023-01916-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41599-023-01916-3
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41599-023-01916-3?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. Yasmine M. Abdelfattah & Aamer S. Abu-Qarn & J. Paul Dunne & Shadwa Zaher, 2014. "The Demand for Military Spending in Egypt," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(3), pages 231-245, June.
    2. J. M. Keynes, 1937. "The General Theory of Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 51(2), pages 209-223.
    3. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2230-2260, December.
    4. Narayan, Paresh Kumar & Nielsen, Ingrid & Smyth, Russell, 2008. "Panel data, cointegration, causality and Wagner's law: Empirical evidence from Chinese provinces," China Economic Review, Elsevier, vol. 19(2), pages 297-307, June.
    5. 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.
    6. Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2003. "Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 567-583, September.
    7. Antonella Biscione & Raul Caruso, 2021. "Military Expenditures and Income Inequality Evidence from a Panel of Transition Countries (1990-2015)," Defence and Peace Economics, Taylor & Francis Journals, vol. 32(1), pages 46-67, January.
    8. J Paul Dunne, Eftychia Nikolaidou, 2005. "Military Spending and Economic Growth in Greece, Portugal and Spain," Frontiers in Finance and Economics, SKEMA Business School, vol. 2(1), pages 1-17, June.
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Alan T. Peacock & Jack Wiseman, 1961. "The Growth of Public Expenditure in the United Kingdom," NBER Books, National Bureau of Economic Research, Inc, number peac61-1, January.
    11. Anisul Islam, 2001. "Wagner's law revisited: cointegration and exogeneity tests for the USA," Applied Economics Letters, Taylor & Francis Journals, vol. 8(8), pages 509-515.
    12. Muthi Samudram & Mahendhiran Nair & Santha Vaithilingam, 2009. "Keynes and Wagner on government expenditures and economic development: the case of a developing economy," Empirical Economics, Springer, vol. 36(3), pages 713-713, June.
    13. H. Sonmez Atesoglu, 2002. "Defense Spending Promotes Aggregate Output in the United States--Evidence from Cointegration Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(1), pages 55-60.
    14. Peter Batchelor & J. Paul Dunne & David Saal, 2000. "Military spending and economic growth in South Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(4), pages 553-571.
    15. Masako Ikegami & Zijian Wang, 2023. "Does military expenditure crowd out health-care spending? Cross-country empirics," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(2), pages 1657-1672, April.
    16. Dimitrios Paparas & Christian Richter & Ioannis Kostakis, 2019. "The validity of Wagner’s Law in the United Kingdom during the Last Two Centuries," International Economics and Economic Policy, Springer, vol. 16(2), pages 269-291, April.
    17. Eric S. Lin & Hamid E. Ali & Yu-Lung Lu, 2015. "Does Military Spending Crowd Out Social Welfare Expenditures? Evidence from a Panel of OECD Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(1), pages 33-48, February.
    18. Nikolaos Dritsakis & Antonis Adamopoulos, 2004. "A causal relationship between government spending and economic development: an empirical examination of the Greek economy," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 457-464.
    19. Wang, Kai-Hua & Su, Chi-Wei & Lobonţ, Oana-Ramona & Umar, Muhammad, 2021. "Whether crude oil dependence and CO2 emissions influence military expenditure in net oil importing countries?," Energy Policy, Elsevier, vol. 153(C).
    20. Anas Al Qudah & Azzouz Zouaoui & Mostafa E. Aboelsoud, 2020. "Does corruption adversely affect economic growth in Tunisia? ARDL approach," Journal of Money Laundering Control, Emerald Group Publishing Limited, vol. 23(1), pages 38-54, January.
    21. repec:bgu:wpaper:163 is not listed on IDEAS
    22. Isiaka Akande Raifu & Alarudeen Aminu, 2023. "The effect of military spending on economic growth in MENA: evidence from method of moments quantile regression," Future Business Journal, Springer, vol. 9(1), pages 1-21, December.
    23. Pieroni, Luca & d'Agostino, Giorgio & Lorusso, Marco, 2008. "Can we declare military Keynesianism dead?," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 675-691.
    24. John Paul Dunne, 2012. "Military Spending, Growth, Development And Conflict," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(6), pages 549-557, December.
    25. Muthi Samudram & Mahendhiran Nair & Santha Vaithilingam, 2009. "Keynes and Wagner on government expenditures and economic development: the case of a developing economy," Empirical Economics, Springer, vol. 36(3), pages 697-712, June.
    26. Emre Atilgan & Dilek Kilic & Hasan Murat Ertugrul, 2017. "The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(5), pages 567-574, June.
    27. Nadeem Burney, 2002. "Wagner's hypothesis: evidence from Kuwait using cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 34(1), pages 49-57.
    28. Akitoby, Bernardin & Clements, Benedict & Gupta, Sanjeev & Inchauste, Gabriela, 2006. "Public spending, voracity, and Wagner's law in developing countries," European Journal of Political Economy, Elsevier, vol. 22(4), pages 908-924, December.
    29. 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.
    30. Manamperi, Nimantha, 2016. "Does military expenditure hinder economic growth? Evidence from Greece and Turkey," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1171-1193.
    31. Ali Hamid E., 2011. "Military Expenditures and Human Development: Guns and Butter Arguments Revisited: A Case Study from Egypt," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 17(1), pages 1-21, September.
    32. Jeffrey Smith & M. H. Tuttle, 2008. "Does Defense Spending Really Promote Aggregate Output In The United States?," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(6), pages 435-447.
    33. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.
    34. John Kibara Manyeki & Balázs Kotosz, 2017. "Empirical Analysis of the Wagner Hypothesis of Government Expenditure Growth in Kenya: ARDL Modelling Approach," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 13(02), pages 45-57.
    35. Mohamed Maher & Yanzhi Zhao, 2022. "Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(8), pages 956-979, November.
    36. van Zon, Adriaan & Muysken, Joan, 2001. "Health and endogenous growth," Journal of Health Economics, Elsevier, vol. 20(2), pages 169-185, March.
    37. Ismael Hossein-zadeh, 2009. "Social vs. Military Spending: How the Escalating Pentagon Budget Crowds out Public Infrastructure and Aggravates Natural Disasters—the Case of Hurricane Katrina," Review of Social Economy, Taylor & Francis Journals, vol. 67(2), pages 149-173.
    38. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    39. Adam Coutts & Adel Daoud & Ali Fakih & Walid Marrouch & Bernhard Reinsberg, 2019. "Guns and butter? Military expenditure and health spending on the eve of the Arab Spring," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(2), pages 227-237, February.
    Full references (including those not matched with items on IDEAS)

    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. Philip Arestis & Hüseyin Şen & Ayşe Kaya, 2021. "On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law," Economic Change and Restructuring, Springer, vol. 54(2), pages 265-303, May.
    2. Cosimo Magazzino, 2012. "The Nexus between Disaggregated Public Spending and GDP in the Euro Area," Economics Bulletin, AccessEcon, vol. 32(3), pages 2560-2579.
    3. Haider Hassan Itoo & Mohammad Asif & Nazim Ali & Md Abusaad, 2024. "Wagner’s law revisited: investigating the asymmetric relationship between national income and public expenditure in India," SN Business & Economics, Springer, vol. 4(10), pages 1-20, October.
    4. Mona Rabea Abd Elfattah Elsayed, 2024. "Guns versus Growth: Assessing the Validity of the Benoit Hypothesis on the Egyptian Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 71-80, September.
    5. Nicholas Odhiambo, 2015. "Government Expenditure and Economic Growth in South Africa: an Empirical Investigation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(3), pages 393-406, September.
    6. Thabane, Kanono & Lebina, Sello, 2016. "Economic Growth and Government Spending Nexus: Empirical Evidence from Lesotho," African Journal of Economic Review, African Journal of Economic Review, vol. 4(1), January.
    7. Sheilla Nyasha & Nicholas M. Odhiambo, 2019. "Government Size and Economic Growth: A Review of International Literature," SAGE Open, , vol. 9(3), pages 21582440198, September.
    8. Ali, Wajid & Munir, Kashif, 2016. "Testing Wagner versus Keynesian Hypothesis for Pakistan: The Role of Aggregate and Disaggregate Expenditure," MPRA Paper 74570, University Library of Munich, Germany.
    9. V. Chandran Govindaraju & Ramesh Rao & Sajid Anwar, 2011. "Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views," Economic Change and Restructuring, Springer, vol. 44(3), pages 203-219, August.
    10. Ciro Bazán & Víctor Josué Álvarez-Quiroz & Yennyfer Morales Olivares, 2022. "Wagner’s Law vs. Keynesian Hypothesis: Dynamic Impacts," Sustainability, MDPI, vol. 14(16), pages 1-25, August.
    11. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.
    12. repec:ipg:wpaper:2014-380 is not listed on IDEAS
    13. Shahbaz, Muhammad & Leitão, Nuno Carlos & Uddin, Gazi Salah & Arouri, Mohamed & Teulon, Frédéric, 2013. "Should Portuguese economy invest in defense spending? A revisit," Economic Modelling, Elsevier, vol. 35(C), pages 805-815.
    14. Stephen Moore, 2016. "Wagner in Ireland: An Econometric Analysis," The Economic and Social Review, Economic and Social Studies, vol. 47(1), pages 69-103.
    15. Christian Richter & Dimitrios Paparas, 2012. "The validity of Wagner’s Law in Greece during the last 2 centuries," Working Papers 2012.2, International Network for Economic Research - INFER.
    16. Ayad Hicham, 2020. "Government Expenditure and Economic Growth Nexus in Mena Countries: Frequency Domain Spectral Causality Analysis," Economics and Business, Sciendo, vol. 34(1), pages 60-77, January.
    17. Omoshoro-Jones, Oyeyinka Sunday, 2016. "A Cointegration and Causality Test on Government Expenditure –Economic Growth Nexus: Empirical Evidence from a South African Province," MPRA Paper 102085, University Library of Munich, Germany, revised 17 Oct 2017.
    18. Magazzino, Cosimo, 2010. "Wagner's law and augmented Wagner's law in EU-27. A time-series analysis on stationarity, cointegration and causality," MPRA Paper 26668, University Library of Munich, Germany.
    19. Tiwari, Aviral & Shahbaz, Muhammad, 2011. "Does Defence Spending Stimulate Economic Growth in India?," MPRA Paper 30880, University Library of Munich, Germany, revised 18 Apr 2011.
    20. Nayak, Dinesh Kumar & Hazarika, Bhabesh, 2022. "Linkage between Income and Government Expenditure at Indian Sub-nationals: A Second Generation Panel Co-integration Techniques," Working Papers 22/374, National Institute of Public Finance and Policy.
    21. Innocent.U. Duru & Millicent Adanne Eze & Bartholomew.O.N. Okafor & Abubakar Yusuf & Lawrence.O. Ede & Abubakar Sadiq Saleh, 2021. "Military Outlay and Economic Growth: The Scenarios of Lake Chad Basin Countries of the Republic of Chad and Nigeria," Growth, Asian Online Journal Publishing Group, vol. 8(1), pages 12-26.

    More about this item

    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:pal:palcom:v:10:y:2023:i:1:d:10.1057_s41599-023-01916-3. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: https://www.nature.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.