Military expenditure and employment in South Africa*

Abstract

Previous research into the impact of military expenditure on employment finds considerable variation across countries. This paper adds to the debate by examining the long run relationship between military burden and manufacturing employment in South Africa. Such an analysis provides an opportunity to test for crowding‐out effects and the impact of the marked decline in military spending on the South African economy. The paper finds evidence supporting the view that military expenditure will have a detrimental impact on long term manufacturing employment, adversely affecting industrial structure and efficiency.