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Debt burden, military spending and growth in Sub-Saharan Africa : a dynamic panel data analysis

journal contribution
posted on 06.12.2017, 00:00 authored by Abdullahi AhmedAbdullahi Ahmed
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.

Funding

Category 1 - Australian Competitive Grants (this includes ARC, NHMRC)

History

Issue

2012

Start Page

1

End Page

22

Number of Pages

22

eISSN

1476-8267

ISSN

1024-2694

Location

London, UK

Publisher

Routledge Taylor & Francis Group

Language

en-aus

Peer Reviewed

Yes

Open Access

No

External Author Affiliations

Faculty of Arts, Business, Informatics and Education; Institute for Resource Industries and Sustainability (IRIS);

Era Eligible

Yes

Journal

Defence and peace economics.