Military expenditures and human capital development in sub-Saharan Africa: a system GMM approach

Abstract

ABSTRACTThis study investigates the military outlays effects on human capital development in sub-Saharan Africa. By using panel data covering 44 countries from 1995 to 2020, a system Generalized Method of Moments is adopted as the estimation technique of a dynamic panel model. Findings show that military outlays have a significant positive effect on education spending in sub-Saharan Africa. However, the sensitivity analysis reports a mitigated result, highlighting the diversity of evidence on the ‘guns better than butter’ literature. While military outlays positively affect education expenditures in central and southern African sub-regions, they crowd-out the public spending allocated to education development in Sahel & Lake Chad area, western and eastern sub-regions. These results, therefore, suggest that policy makers should promote the approach which considers defense as a component of socioeconomic development by regulating the perfect ratio of military spending that meets their needs.

Keywords

• Guns vs butter dilemma
• defense spending
• education spending
• system-GMM