Nexus between Defence Expenditure and Economic Performance in Nigeria
Abstract
This paper investigates the nexus between defence expenditure and economic performance in Nigeria using data from 1981 - 2018. The methodology used for this study is Vector Autoregressive (VAR) Model. The variables used for the analysis include: gross domestic product, poverty rate and unemployment rate used as measures of economic performance; other variables are defence expenditure, internal security expenditure and gross capital formation. The data was tested for stationarity test and the results were mixed series that is I(0) and I(1). This was followed by Johansen’s co-integration test. The result showed the existence of long-run relationships among the variables. The VAR results showed that Defence Expenditure has not contributed significantly to economic growth, poverty and unemployment while internal security expenditure contributed to economic growth, poverty reduction and unemployment. The study recommends that the government should address the insecurity by ensuring that allocated funds to defence and internal security are judiciously expended in order to achieve peace in Nigeria and this will be able to promote economic growth, poverty reduction and unemployment. Well utilized funds for internal security will foster peace and security in the country and help in the attainment of the goal 8 of the Sustainable Development Goals (SDG’s) as well as setting the foundation for inclusive economic growth and development.
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