2025/05/29 by Ekpo, Udo, Daniel, Ekere
#Defence spending #Nigeria #economic growth #empirical investigation
paper · doi:10.60951/afrischolar-432
This paper examined defence spending and economic growth nexus in Nigeria using annual data for the period, (1981-2018). A modified and extended aggregate production function framework (APF) model was adopted and the econometric techniques of unit root test, co-integration analysis, error correction model (ECM) and Ordinary Least Square (OLS) technique were employed to establish the relationship between real gross domestic product (RGDP)(proxy for economic growth) and defence spending (DF) together with other control variables such as exchange rate (EXR), gross fixed capital formation (GFCF), labour force (LF), government capital expenditure (GCE) and trade openness (TO). The unit root test results indicated that all the variables (RGDP, DF, EXR, GFCF, LF, GCE, and TO) were stationary at first difference 1(1) at 5% level of significance. The study finds that defence spending has significant negative effect on real aggregate output (RGDP) and consequently economic growth in the short-run and significant positive impact in the long-run. The co-integration test result shows that the variables were co-integrated at 5% level of significance and consequently, there existed a long run relationship between the variables employed in the model. The error correction model (ECM) result shows the coefficient of defence expenditure (LDF) had significant negative sign which implies an increase in defence spending significantly deters economic growth in the short run. The Ordinary Least Square (OLS) result indicates that defence expenditure has significant positive impact on the real aggregate output (RGDP) in the long-run and consequently on economic growth. To improve security in Nigeria and enhance positive impact of defence expenditure on the economic growth, there should be proper funding of Research and Development (R&D) activities of the armed forces, police force and other national security outfits in order to improve their skills, enlarge their capacities and especially, indigenize their technology. The development of security information communication technology (ICT) tools and its robust utilization in Nigeria should be given more attention. For proper domestic surveillance to be carried out, the security forces in Nigeria especially the police force should be restructured with state, local government and community policing incorporated, and traditional institutions should be involved and their constitutional roles in this regard well defined.