The Effects of Defense and Security on Capital Formation in Africa

An Empirical Investigation

by Daniel F. Kohler

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The military influences economic development in many ways. On the negative side, the resource demands of the defense establishment compete with civilian demands. On the positive side, the military may increase security, which should lead to higher investment and growth. Finally, the military may indirectly foster economic development because of its "modernization perspective." This Note investigates the relationship among defense-related variables (e.g., military expenditure) and economic growth in sub-Saharan Africa. The author constructs a general econometric model and applies it to recent data (from 1971 through 1981) from 27 sub-Saharan African countries. The results clearly support the hypothesis that a well-equipped and well-trained army can induce additional investment, presumably through its security-enhancing effects.

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