A cross-regional analysis of military expenditure, state fragility and economic growth in Africa

Abstract

This study investigates the relationship between military expenditure, state fragility and economic growth at regional economic communities of African countries. With a balanced panel of 34 African countries spanning 1990–2015. The variables of interest for this study include military expenditure, state fragility and economic growth. To measure economic growth, real gross domestic product per capita serves as the proxy, while state fragility is measured by the state fragility index, and military expenditure by military expenditure as a percentage share of GDP. We utilise: panel causality and cointegration test; and the generalised method of moments (GMM) estimation techniques. The causality results suggest a feedback relationship among our variables of interest and this justified the use of GMM. Our analysis suggests that the effect of military expenditure on growth is negative at Africa level with significant regional economic level differences, and this effect is influenced in the presence of state fragility. This imply that there exist complementary effects between military expenditure and state fragility on growth. A cut in military expenditure and a consideration of other means of dealing with fragility issues as an alternative to joint regional militarised intervention of regional governments of African countries is recommended.