Debt Burden, Military Spending and Growth in Sub-Saharan Africa: A Dynamic Panel Data Analysis

Abdullahi Ahmed

    Research output: Contribution to journalArticlepeer-review

    24 Citations (Scopus)

    Abstract

    This article empirically explores the relationship between military expenditure, external debts and economic performance in the economies of sub-Saharan Africa using a sample of 25 countries from 1988-2007. In investigating the defence-external debt nexus, we employ three advanced panel techniques of fully modified OLS (FMOLS), Dynamic OLS (DOLS) and dynamic fixed effect (DFE) to estimate our model. We observe that military expenditure has a positive and significant impact on external debt in African countries. Real GDP affects the total debt stock of African countries with a negative relationship. Our empirical results based on long-run elasticities show that a 1% rise in national output leads to a decline in external debt by 1.52%, on average. Policy-wise, the study suggests that African countries need to strengthen areas of fiscal responsibility and pursue models that encourage rational spending, particularly reductions in military expenditure.

    Original languageEnglish
    Pages (from-to)485-506
    Number of pages22
    JournalDEFENCE AND PEACE ECONOMICS
    Volume23
    Issue number5
    DOIs
    Publication statusPublished - Oct 2012

    Keywords

    • Debt burden
    • Military expenditure
    • Panel cointegration
    • SSA countries

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