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Illicit Natural Resource Trade and Security: Does Gold customs fraud Expand or Undermine Military Spending in Africa?

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  • Banao, Fawzi

Abstract

In resource-rich African countries, the illicit trafficking of mineral resources poses a growing threat to state stability and governance. Therefore the paper investigates the effect of gold customs fraud on military spending, using a panel dataset of 50 African countries from 2000 to 2019. Employing an instrumental variable strategy, we find that higher levels of gold customs fraud are significantly associated with lower military expenditures. These findings suggest that illicit resource flows erode governments' tax mobilization and undermine their ability to respond to defense needs. The results are robust across multiple econometric specifications, including system GMM, and Jackknife estimation.

Suggested Citation

  • Banao, Fawzi, 2025. "Illicit Natural Resource Trade and Security: Does Gold customs fraud Expand or Undermine Military Spending in Africa?," EconStor Preprints 315363, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:315363
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    File URL: https://www.econstor.eu/bitstream/10419/315363/1/MILITARIZATION-AND-BORDER-SECURITY.pdf
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    References listed on IDEAS

    as
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