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Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach

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  • Mohamed Maher
  • Yanzhi Zhao

Abstract

Previous studies have investigated the relationship between political instability and economic growth separately from the relationship between military expenditure and economic growth. Besides, they did not cover the period after 2011 (i.e. the Arab Spring and its consequences). Therefore, this paper attempts to empirically analyze the long-run and short-run impacts of both political instability and military expenditure on economic growth in Egypt. We estimate the autoregressive distributed lag (ARDL) approach using data on the Egyptian economy over the period 1982–2018. For the robustness of our results, we use the fully modified ordinary least squares (FMOLS) estimator. Results of the ARDL approach indicate a significant negative relationship between political instability and economic growth in both the long-run and short-run. Contrarily, military expenditure has an insignificant impact on economic growth, especially in the long-run. These results are confirmed by the FMOLS estimator. Moreover, the estimated coefficient on the one-period lagged error correction term (ECTt-1) indicates that deviations from the long-run equilibrium relationship are corrected within a year.

Suggested Citation

  • Mohamed Maher & Yanzhi Zhao, 2022. "Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(8), pages 956-979, November.
    • Handle: RePEc:taf:defpea:v:33:y:2022:i:8:p:956-979
    DOI: 10.1080/10242694.2021.1943625
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    References listed on IDEAS

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    2. Ali Compaore & Montfort Mlachila & Rasmané Ouedraogo & Sandrine Sourouema, 2020. "The Impact of Conflict and Political Instability on Banking Crises in Developing Countries," Working Papers halshs-02499068, HAL.
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    2. Ally, Zawadi & Kingu, John, 2024. "The Dynamics of Political Stability and Military Expenditure on Economic Growth: Insights from Tanzania," African Journal of Economic Review, African Journal of Economic Review, vol. 12(3), September.
    3. Mona Rabea Abd Elfattah Elsayed, 2024. "Guns versus Growth: Assessing the Validity of the Benoit Hypothesis on the Egyptian Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 71-80, September.
    4. Shreesh Chary, 2023. "The nexus between arms imports, military expenditures and economic growth of the top arms importers in the world: a pooled mean group approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 51(4), pages 808-822, August.
    5. Stamegna, Marco & Bonaiuti, Chiara & Maranzano, Paolo & Pianta, Mario, 2024. "The economic impact of arms spending in Germany, Italy, and Spain," MPRA Paper 120608, University Library of Munich, Germany.
    6. Eman Elish & Hossam Eldien Ahmed & Mostafa E. AboElsoud, 2023. "Military spending crowding out health and education spending: which views are valid in Egypt?," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    7. Ekene ThankGod Emeka & Jonathan E. Ogbuabor & Davidmac O. Ekeocha, 2024. "Terrorism and economic complexity in Africa: The unconditional impact of military expenditure," African Development Review, African Development Bank, vol. 36(1), pages 139-152, March.
    8. Yanyan, Fu & Dong, Xitao, 2024. "Exploring the influence of internal and external conflicts on the resource curse hypothesis in OECD countries," Resources Policy, Elsevier, vol. 88(C).
    9. Tsitouras Antonis & Tsounis Nicholas, 2024. "Military Outlays and Economic Growth: A Nonlinear Disaggregated Analysis for a Developed Economy," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 30(3), pages 341-391.
    10. Nimonka Bayale & Babatunde Mohamed Sanny Gado & Niim‐Bénoua Nahum Sambieni & Komla Kuma Esobiyu Tchala, 2024. "Dépenses militaires et croissance économique dans l'UEMOA: une analyse des effets de seuil et des canaux de transmission," African Development Review, African Development Bank, vol. 36(1), pages 41-54, March.

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