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Defence spending and economic growth in South Africa: A supply and demand model

Author

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  • Paul Dunne
  • Eftychia Nikolaidou
  • Andre Roux

Abstract

This paper provides a contribution to the growing corpus of knowledge and understanding of the interaction between economic growth and defence spending in South Africa by specifying a Keynesian simultaneous equation model and estimating the system for the period 1961 to 1997. The model contains a growth equation, a savings equation, a trade balance equation and a military burden equation and when estimated by single equation and systems estimation methods is relatively well specified. There is evidence of an overall negative effect of military spending on the economy over this period, though the significance of individual coefficients is low. There is certainly no evidence of any positive impact, suggesting that cuts in military spending do present an opportunity for improved macroeconomic performance.

Suggested Citation

  • Paul Dunne & Eftychia Nikolaidou & Andre Roux, 2000. "Defence spending and economic growth in South Africa: A supply and demand model," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(4), pages 573-585.
  • Handle: RePEc:taf:defpea:v:11:y:2000:i:4:p:573-585
    DOI: 10.1080/10430710008404967
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    File URL: http://www.tandfonline.com/doi/abs/10.1080/10430710008404967
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    References listed on IDEAS

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    1. J Paul Dunne, Eftychia Nikolaidou, 2005. "Military Spending and Economic Growth in Greece, Portugal and Spain," Frontiers in Finance and Economics, SKEMA Business School, vol. 2(1), pages 1-17, June.
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    Cited by:

    1. Hou Na & Chen Bo, 2014. "Military Spending and Economic Growth in An Augmented Solow Model: A Panel Data Investigation for OECD Countries," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(3), pages 1-15, August.
    2. Phiri, Andrew, 2016. "Does military spending nonlinearly affect economic growth in South Africa?," MPRA Paper 69730, University Library of Munich, Germany.
    3. Thilo Klein, 2004. "Military expenditure and economic growth: peru 1970-1996," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(3), pages 275-288.
    4. Na Hou & Bo Chen, 2013. "Military Expenditure And Economic Growth In Developing Countries: Evidence From System Gmm Estimates," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 183-193, June.

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