Effect of military expenditure on economic growth in Uganda: An ARDL bounds testing approach

Abstract

The effects of military spending on Economic growth is contentious and therefore requires further analysis on a country by country basis to determine its level of significance. Uganda’s military contributions to Peace and Security in the region and the recent rise of various insurgencies, particularly, Lord’s Resistance Army (LRA) and Allied Democratic Forces (ADF), arguably the most fatal insurgent groups have increased Uganda’s military expenditure. Many people in the affected areas have been forced to stay in displaced camps or run away for safety rather than providing labor and education for economic growth. This study investigates the effects of this increase in military spending on the economic growth (measured by real GDP) of Uganda using time series data and the Autoregressive Distributed Lag (ARDL) bounds testing approach to co-integration and thereby employing augmented Solow growth model for the period between 1985 and 2022. The results suggest that there is short run negative significant relationship between military spending and economic growth in Uganda. However, the effect is not significant in a long run. The study therefore recommends that policy makers need to have a greater focus on development expenditure as compared to military expenditure. Keywords: ARDL, Economic growth, Military expenditure, Cointegration and Uganda