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Defence spending and economic growth in South Africa: A supply and demand model

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  • Paul Dunne
  • Eftychia Nikolaidou
  • Andre Roux

Abstract

This paper provides a contribution to the growing corpus of knowledge and understanding of the interaction between economic growth and defence spending in South Africa by specifying a Keynesian simultaneous equation model and estimating the system for the period 1961 to 1997. The model contains a growth equation, a savings equation, a trade balance equation and a military burden equation and when estimated by single equation and systems estimation methods is relatively well specified. There is evidence of an overall negative effect of military spending on the economy over this period, though the significance of individual coefficients is low. There is certainly no evidence of any positive impact, suggesting that cuts in military spending do present an opportunity for improved macroeconomic performance.

Suggested Citation

  • Paul Dunne & Eftychia Nikolaidou & Andre Roux, 2000. "Defence spending and economic growth in South Africa: A supply and demand model," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(4), pages 573-585.
    • Handle: RePEc:taf:defpea:v:11:y:2000:i:4:p:573-585
    DOI: 10.1080/10430710008404967
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. Saba Charles Shaaba, 2022. "Defence Spending and Economic Growth in South Africa: Evidence from Cointegration and Co-Feature Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 28(1), pages 51-100, February.
    2. 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.
    3. 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.
    4. Ulrich KEMBENG, 2022. "Military Expenditure and Economic Growth in Chad: An Application of The ARDL Method," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(9), pages 471-475, September.
    5. Andrew Phiri, 2019. "Does Military Spending Nonlinearly Affect Economic Growth in South Africa?," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(4), pages 474-487, June.
    6. Biyase, Mduduzi & Eita, Hinaunye & Udimal, Thomas & Zwane, Talent, 2022. "Military Spending and Inequality in South Africa: An ARDL Bound Testing Approach to Cointegration," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(2), pages 241-268.
    7. Thilo Klein, 2004. "Military expenditure and economic growth: peru 1970-1996," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(3), pages 275-288.
    8. Na Hou & Bo Chen, 2013. "Military Expenditure And Economic Growth In Developing Countries: Evidence From System Gmm Estimates," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 183-193, June.
    9. Goodness C. Aye & Mehmet Balcilar & John P. Dunne & Rangan Gupta & Rene� van Eyden, 2014. "Military expenditure, economic growth and structural instability: a case study of South Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(6), pages 619-633, December.
    10. Abdul Rasheed Sithy Jesmy & Mohd Zaini Abd Karim & Shri Dewi Applanaidu, 2016. "Do Military Expenditure and Conflict Affect Economic Growth in Sri Lanka? Evidence from the ARDL Bounds Test Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 1-14, March.
    11. Thanh Dinh Su & Canh Phuc Nguyen, 2022. "Productive Contribution of Public Spending and Human Capital in Developing Countries Revisited: The Role of Trade Openness," Foreign Trade Review, , vol. 57(1), pages 66-84, February.

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