Economic growth and military spending in South Africa

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Abstract
This study applies a statistical model to examine the overtime relationship between military expenditure and economic growth in South Africa. The model is based on a neoclassical production function, and is developed and estimated for the time period 1950 to 1985. The results indicate that the size effects of military expenditure on economic growth are negative, while the externality effects of military spending are positive. In addition, decreasing foreign investment and increasing domestic unrest are found to have negative impacts on GDP growth. Labor employment is positively related to growth, but non‐white labor is more strongly significant than white labor. These results are consistent with previous cross‐section studies that find some evidence for positive and negative effects of military spending on economic growth.