International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue IX, September 2022|ISSN 2454-6186
Military Expenditure and Economic Growth in Chad: An Application of The ARDL Method
Ulrich KEMBENG
Faculty of Economics and Management, University of Dschang, Cameroon
Abstract: – African countries have received little attention in defense economics literature, despite the role that Chad and some African countries have played and continue to play in maintaining peace in the Sahel region. This study attempts to partially fill this gap by providing new evidence of the effect of military spending on economic growth in Chad between 1983 and 2015. This study uses the Autoregressive Distributed lag Model (ARDL) and finds no significant effects of military spending on Chad’s economic growth. The study shows that domestic investment has a positive and significant impact on economic growth.
Keywords: Military spending, Economic growth, ARDL, Chad
I. INTRODUCTION
The security threat that Chad has faced for several decades has led to an exponential increase in military spending with unclear consequences for economic growth. Since 2000, the Government of Chad has allocated significant parts of the Budget to military and security spending. According to the CCFD- Earth solidarity (2012) report, Chad’s military spending between 2004 and 2008 has increased eightfold (from € 53 million in 2004 to € 420 million in 2008), representing 7,1% of GDP, while Chad is ranked 183rd out of 187 countries according to UNDP’s “Human Development Index”. In addition, the defense sector is second in terms of budgetary allocation, in relation to infrastructure and health (Finance Act). According to the SIPRI report of 2014, Chad spent around 610 million USD in 2013 (CFAF 353 billion), far ahead of Cote d’Ivoire and Cameroon, whose military expenditure amounted to USD 453 million (CFAF 256 billion) and $ 392 million (CFAF 227 billion). This large share of Chad’s national wealth devoted to military spending raises the question of the economic impact of such expenditures.
The relationship between military spending and economic growth has been the subject of a number of studies, with rather mixed conclusions since Benoit’s seminal work (1973). Some authors conclude from Benoit (1973, 1978) that military spending has a positive impact on the rate of growth [Atesoglu, (2002); Yildrim et al (2005); Kollias et al. (2007); Wijeweera and Webb (2009); Farzanegan (2012)], while other studies result in an insignificant effect [Adam et al. (1991); Gerace, (2002)] even negative effect [Aye et al. (2014); Dunne and Nikolaidou (2012); Dunne et al. (2002)] of military spending on economic growth. These different findings fuel the controversy over the relationship between military spending and economic growth (Wijeweera and Webb (2