Military Expenditure, Economic Growth, and Foreign Policy Implications

Abstract

The chapter discusses the nature of the relationship between military expenditure, economic growth, and foreign policy commitments, and the consequences on economic growth of apportioning an increased part of the gross domestic product to the military in developing countries of Ghana and Nigeria within the Economic Community of West Africa during 1986-2016. Military expenditure has generated controversy, especially in developing countries of Africa, as it competes with demands for sustainable growth and development. Applying the Johansen co-integration test and Granger causality, the results show that high growth rates have enabled the two countries to increase military spending, ensure their own domestic security, and fulfill international security commitments in the West African sub-region and internationally, with negative effect in the long-run and positive effect in the short run on economic growth. The lack of defense and military expenditure linkage with the wider economy is the resultant socio-economic cost recorded over the period under study.