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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Author(s)
Peter Ego Ayunku
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DOI:10.17265/1537-1514/2018.08.003
Affiliation(s)
Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria
ABSTRACT
This study investigates
whether there exists
any relationship between defense spending and economic growth in Nigeria, for
the period of 1977 to 2010. We employed ex-post facto research
design in this study as a set of some econometric techniques which utilized to
investigate the relationship between defense spending and economic growth in
Nigeria. The estimation regression result revealed that, defense (DEF) and
Interest rate (INT) had a positive influence on economic growth in Nigeria in
the long run, while in the short run defense (DEF) and Interest rate (INT) had a
negative influence on economic growth in Nigeria. However, the pairwise granger
causality test indicates a bi-directional relationship between defense and
economic growth, while there was no causal relationship between interest rate
and defense and economic growth respectively. Also, the VEC (Vector Error Correction) residual
normality test indicates that the residuals are multivariate and are jointly
normal. The study therefore, amongst others recommends that government should increase funding on defense
and if possible seek foreign aid so as to adequately tackle the menace of “Boko
Haram” insurgency in the northern part of Nigeria so as to attract foreign
investment that would further stimulate economic growth and development in
Nigeria.
KEYWORDS
economic growth, co-integration, Vector Error Correction Model (VECM), “Boko Haram”, insurgency
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