Military Expenditure, Oil Revenue and Economic Growth in Nigeria: A Joint-Interactive Term Approach
Military Expenditure, Oil Revenue and Economic Growth in Nigeria: A Joint-Interactive Term Approach

Author(s): Wasiu O Abimbola
Subject(s): Security and defense, Military policy
Published by: Scientia Moralitas Research Institute
Keywords: Defense Spending; military expenditure; oil revenue; economic growth
Summary/Abstract: The role of the Nigerian military in ensuring smooth operation and exportation of crude oil cannot be overemphasized. This is owing to the fact that the chunk of Nigeria’s foreign exchange earnings comes from crude oil exportation. Boris (2015) confirms that oil is arguably the livelihood of the modern economy and it has now become the most essential commodity in the world. It is a statement of the fact that oil revenue is the major source at which governments at all levels in Nigeria finance their budgets. This is why the Nigerian military would leave no stone unturned in protecting the nation’s source of living. However, while some scholars believe military expenditure plays a positive role in the economies of developing countries, others view the role as detrimental. One of the reasons why the analysis of military expenditure has not led to a conclusive result might be due to the non-identification of the correct channel. Investigating the role of the military sector on economic growth via the Nigeria oil sector may therefore be a good channel of analysis. Therefore, this paper tries to mainly investigate the joint nexus between military expenditure and oil revenue, and economic growth in Nigeria. To achieve this, time series data were gathered and analyzed using OLS technique with the aid of EVIEWS 10 package. The model used included a joint-interactive term. The result of the analysis reveals that military expenditure is individually statistically and significantly positive with economic growth. Though, as a joint interactive term with oil revenue, it is negatively statistically insignificant but this might be due to the oil revenue being individually statistically insignificant. The study, therefore, recommended military expenditure as one of the factors the Nigerian government should employ in influencing her economic growth.

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