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Military Spending and Inequality in South Africa: An ARDL Bounds Testing Approach to Cointegration

Author

Listed:
  • Mduduzi Biyase

    (College of Business and Economics, University of Johannesburg)

  • Hinaunye Eita

    (College of Business and Economics, University of Johannesburg)

  • Thomas Udimal

    (Southwest Forestry University)

  • Talent Zwane

    (College of Business and Economics, University of Johannesburg)

Abstract

There has been an increasing interest in understanding the relationship between inequality and military spending. However, given the multifaceted nature of the relationship between these variables, studies have yielded inconsistent results. While some studies in this field considers military spending to be unfavorable to inequality, some studies have found evidence to suggest that it reduces inequality. In South Africa there is comparatively no empirical work investigating the issue. Thus, this paper is the first to investigate this relationship in South Africa and helps to shed some light on the empirical puzzle, by using autoregressive distributed (ARDL) and bounds test for cointegration method. The empirical result established a long run relationship between military expenditures and income inequality in South Africa. An increase in the military expenditures result in high rate of inequality. Based on these findings, it is appropriate for the government's expenditure to be directed at the sectors that have direct impact on the large segment of the population. Military expenditure by its nature is very restrictive and the gains do not trickle down to those who are "trapped" in the quagmire of poverty. It is therefore recommended for more expenditures be directed at "pro-poor" sectors that have direct link with the masses. Government expenditures in the "pro-poor" sectors would help in lifting out those who are experiencing "poverty trapped" and requires the assistance for liberation.

Suggested Citation

  • Mduduzi Biyase & Hinaunye Eita & Thomas Udimal & Talent Zwane, 2022. "Military Spending and Inequality in South Africa: An ARDL Bounds Testing Approach to Cointegration," Economics Working Papers edwrg-05-2022, College of Business and Economics, University of Johannesburg, South Africa, revised 2022.
  • Handle: RePEc:ady:wpaper:edwrg-05-2022
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    References listed on IDEAS

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    More about this item

    Keywords

    inequality; military spending; error correction; ARDL bounds testing;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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