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Revisiting the Military Expenditure-Growth Nexus: Does Institutional Quality Moderate the Effect?

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  • Dada James Temitope

    (Economics, Obafemi Awolowo University, Ile-Ife, Nigeria)

  • Awoleye Emmanuel Olayemi

    (Economics, Hallmark University, Ijebu Itele, Ijebu, Ogun, Nigeria)

  • Arnaut Marina

    (University of Dubai, Dubai, United Arab Emirates)

  • Al-Faryan Mamdouh Abdulaziz Saleh

    (School of Accounting, Economics and Finance, University of Portsmouth, Faculty of Business and Law, Richmond Building, Portland Street, Portsmouth, Hampshire PO1 3DE, UK)

Abstract

The purpose of this study is to examine the moderating role and threshold level of institutional quality in the nexus between military expenditure and economic growth for a panel of 31 African nations. The results reveal that military expenditure negatively influences growth, while institutional quality positively affects growth. The interactive term of institutional quality and military expenditure significantly positively influence economic growth. However, the threshold level of institutional quality for military expenditure to translate into economic growth in the region is found to be 4.61 on an ordinary scale of 0–10, although most countries operate below the threshold point of institutional quality. The study concludes that strong institutional quality serves as important absorptive capacity for military expenditure to drive economic growth in the region.

Suggested Citation

  • Dada James Temitope & Awoleye Emmanuel Olayemi & Arnaut Marina & Al-Faryan Mamdouh Abdulaziz Saleh, 2023. "Revisiting the Military Expenditure-Growth Nexus: Does Institutional Quality Moderate the Effect?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 29(1), pages 19-42, February.
    • Handle: RePEc:bpj:pepspp:v:29:y:2023:i:1:p:19-42:n:5
    DOI: 10.1515/peps-2022-0027
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    More about this item

    Keywords

    military expenditure; economic growth; institutional quality; Africa; threshold;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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