Determinants of Military Spending in Africa: Do Institutions Matter?

Arsène Aurelien Njamen Kengdo; Tii N. Nchofoung; Alice Kos A Mougnol

doi:10.1515/peps-2023-0014

Article

Determinants of Military Spending in Africa: Do Institutions Matter?

Arsène Aurelien Njamen Kengdo , Tii N. Nchofoung and Alice Kos A Mougnol

Published/Copyright: October 30, 2023

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From the journal Peace Economics, Peace Science and Public Policy Volume 29 Issue 4

Abstract

This paper focuses on the determinants of military spending in Africa by considering the role played by institutions. With data obtained between the years 1996–2019, the Driscoll and Kraay fixed effects, the Generalised Method of Moments (GMM), and the Bayesian Model Averaging (BMA) estimators are used. The findings suggest that government size, trade freedom, economic risk, and political risk decrease military spending, whereas government stability and military involvement in politics are found to raise it. Using alternative institutional variables, we find that corruption, government effectiveness, political stability, regulatory quality, the rule of law, and voice and accountability significantly diminish military spending in Africa. In addition, concerning the economic determinants, the results reveal that trade openness and total natural resource rents reduce military spending, while GDP per capita, inflation, and foreign debt stocks increase it. Looking at strategic determinants, arms imports, urban population, and ethnic tensions positively affect African military expenditures. Robustness checks show that these results change once regional specificities are considered. The study concludes that institutional factors could be an engine for evolution in Africa’s military spending.

Keywords: determinants; military spending; institutions

JEL Classification: C23; H56; H5; O43

Corresponding author: Arsène Aurelien Njamen Kengdo, Department of Economics Policy Analysis, Center of Studies and Research in Management and Economics (CERME), Faculty of Economics and Management, University of Dschang, Dschang, Cameroon, Email: arsene.njamen@univ-dschang.org

Acknowledgments

We are grateful to Professor Raul Caruso and the anonymous reviewers for their valuable comments and suggestions that have improved the quality of earlier versions of this paper. They sincerely thank Steve Kwatcho and Diana Tchassieu for proofreading the manuscript. We would also like to thank Hikouatcha Prince and Ngueuleweu Gildas for their helpful comments while writing this paper. The remaining errors are ours.

In memory of André Kengdo.

Conflict of interest statement: No potential conflict of interest was reported by the authors.

Appendix

A1. List of Countries of the Study

All countries	Algeria, Angola, Botswana, Burkina Faso, Cameroon, Congo Dem. Rep, Congo. Rep, Ivory Coast, Egypt, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia, Libya, Madagascar, Malawi, Mali, Morocco, Mozambican, Namibia, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Soudan, Tanzania, Togo, Tunisia, Uganda, Zambia, and Zimbabwe.
North Africa	Algeria, Egypt, Libya, Morocco, Sudan, Tunisia
West Africa	Burkina Faso, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo
East Africa	Ethiopia, Kenya, Madagascar, Malawi, Mozambique, Tanzania, Uganda, Zambia
Central Africa	Angola, Cameroon, Congo-Rep, Gabon
Southern Africa	Botswana, Congo-Dem-Rep, Namibia, South Africa, Zimbabwe

Source: Authors’ construction.

A2. Relationship Between Military Expenditures and its Potential Determinants in Africa

Source: Authors, from the collected data using Stata.

A3. Correlation Matrix

Economic Determinants

		(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
(1)	Military expenditures	1
(2)	Military expenditures (t-1)	0.8033	1
(3)	Trade openness	−0.0855	−0.0831	1
(4)	GDP per capita	0.0216	0.0188	0.434	1
(5)	Inflation consumer price	0.105	0.0855	−0.0257	−0.0820	1
(6)	External debt	0.0595	0.0355	0.0535	−0.177	0.203	1
(7)	Natural resource rent	0.0794	0.0920	0.400	0.188	0.131	0.246	1
(8)	Official development assistance	−0.149	−0.136	−0.183	−0.566	0.00740	0.408	0.0489	1

Source: Authors, from the collected data using Stata

Strategic Determinants

		(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
(1)	Military expenditures	1
(2)	Armed forces	0.264^***	1
(3)	Arm imports	0.178^***	0.409^***	1
(4)	Population (log)	0.0545	−0.0916^***	0.250^***	1
(5)	Urban population	−0.0266	0.446^***	0.128^***	−0.311^***	1
(6)	Ethnic tensions	−0.154^***	0.197^***	0.0868^**	−0.140^***	0.240^***	1
(7)	Religious tensions	−0.0114	−0.0724^**	−0.0330	−0.134^***	0.125^***	0.379^***	1
(8)	External conflict	−0.139^***	0.119^***	0.0402	−0.214^***	0.318^***	0.416^***	0.247^***	1
(9)	Internal conflict	−0.163^***	−0.0970^***	−0.0818^**	−0.244^***	0.157^***	0.569^***	0.530^***	0.563^***	1

Source: Authors, from the collected data using Stata.

Institutional Determinants

		(1)	(2)	(3)	(4)	(5)	(6)	(7)
(1)	Military expenditures	1
(2)	Government size	−0.0458	1
(3)	Trade Freedom	−0.145^***	0.354^***	1
(4)	Economic risk rating	−0.110^***	−0.133^***	0.284^***	1
(5)	Government stability	−0.0355	−0.279^***	−0.0811^**	0.300^***	1
(6)	Military in Politic	−0.163^***	−0.0848^**	0.321^***	0.329^***	0.130^***	1
(7)	Political risk rating	−0.155^***	−0.209^***	0.319^***	0.515^***	0.395^***	0.819^***	1

Source: Authors, from the collected data using Stata

A4. Robustness check: controlling for Attrition Bias

Dependent variable: Military expenditures (Mil_exp)
Variables	(1)	(2)	(3)
Military expenditures (t − 1)	0.538^***	0.534^***	0.702^***
Military expenditures (t − 1)	(0.0382)	(0.0611)	(0.0400)
Trade openness	−0.00915
Trade openness	(0.00781)
GDP per capita	−1.293^*
GDP per capita	(0.741)
Inflation consumer price	−0.00550
Inflation consumer price	(0.00354)
External debt	0.00600^**
External debt	(0.00293)
Natural resource rent	0.0138
Natural resource rent	(0.0177)
Official development assistance	−0.0508
Official development assistance	(0.0317)
Armed forces		1.349
Armed forces		(0.873)
Arm imports		0.134
Arm imports		(0.144)
Population (log)		−8.728^***
Population (log)		(2.768)
Urban population		0.312^***
Urban population		(0.110)
Ethnic tensions		−0.541^*
Ethnic tensions		(0.298)
Religious tensions		0.129
Religious tensions		(0.274)
External conflict		−0.398^*
External conflict		(0.205)
Internal conflict		0.161
Internal conflict		(0.172)
Government size			0.123
Government size			(0.143)
Trade freedom			−0.369^**
Trade freedom			(0.150)
Economic risk rating			−0.0672^**
Economic risk rating			(0.0274)
Government stability			0.00501
Government stability			(0.100)
Military in politics			0.159
Military in politics			(0.182)
Political risk rating			0.000862
Political risk rating			(0.0319)
Observations	549	260	445
Countries	32	26	36
p-value OID	0.2848	0.4718	0.9155
Fisher-statistic	34.81^***	20.72^***	48.35^***

Standard errors in parentheses. ^*** p < 0.01, ^** p < 0.05, ^* p < 0.1. Notes: Regressions, respectively, with (1) economic determinants; (2) strategic determinants; and (3) institutional determinants.

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Received: 2023-03-06

Accepted: 2023-10-10

Published Online: 2023-10-30

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Articles in the same Issue

https://doi.org/10.1515/peps-2023-0014

Keywords for this article

determinants; military spending; institutions