Recent Articles

Read more about our latest published articles.

Review’s Archive

Author:
Mduduzi Biyase, University of Johannesburg, School of Economics, South Africa

Coauthors:
Hinaunye Eita, School of Economics, University of Johannesburg, South Africa
Thomas Udimal, School of Economics and Management, Southwest Forestry University, China
Talent Zwane, School of Economics, University of Johannesburg, South Africa

Military Spending and Inequality in South Africa: An ARDL Bound Testing Approach to Cointegration

Volume 75 - Issue 2, May 2022
(pp. 241-268)
JEL classification: C22, H56
Keywords: Inequality, Military Spending, Error Correction, ARDL Bounds Testing

Abstract

There has been an increasing interest in understanding the relationship between inequality and military spending. However, given the multifaceted nature of the relationship between these variables, studies have yielded inconsistent results. While some studies in this field consider military spending to be unfavorable to inequality, some studies have found evidence to suggest that it reduces inequality. In South Africa there is comparatively no empirical work investigating the issue. To achieve this objective, we used time series data from 1980-2017 to investigate this relationship in South Africa and help to shed some light on the empirical puzzle, by using autoregressive distributed lag (ARDL) and bounds test for cointegration method. The empirical result established a significant long-run relationship between military expenditures and income inequality in South Africa. An increase in the military expenditures leads to a reduction in the rate of income inequality. The result, however, showed that an increase in per capita income leads to an increase in the rate of income inequality. 


Read the full article

Download the article in PDF format to read and print.


Bibliography

Abell, J.D. (1994), “Military Spending and Income Inequality”, Journal of Peace Research, 31(1), 35-43.

Ali, H.E. (2004), “Essays on Economic Development and Conflict”, PhD dissertation, University of Texas at Austin: TX.

Ali, H.E. (2007), “Military Expenditures and Inequality: Empirical Evidence from Global Data”, Defence and Peace Economics, 18(6), 519-535.

Ali, H.E. (2011), “Military Expenditures and Human Development: Guns and Butter Arguments Revisited: A Case Study from Egypt”, Peace Economics, Peace Science and Public Policy, 17 (1), 1-19.

Ali, H.E. (2012), “Military Expenditure and Inequality in the Middle East and North Africa: A Panel Analysis”, Defence and Peace Economics, 23(6), 575-589.

Batchelor, P. J.P. Dunne and D.S. Saal (2000), “Military Spending and Economic Growth in South Africa”, Defence and Peace Economics, 11(4), 553-571.

Biscione, A. and R. Caruso (2021), “Military Expenditures and Income Inequality: Evidence from a Panel of Transition Countries (1990-2015)”, Defence and Peace Economics, 32(1), 46-67.

Borch, C. and M. Wallace (2010), “Military Spending and Economic Well-Being in the American States: The Post-Vietnam War Era”, Social Forces, 88(4), 1727-1752.

Brown, R.L., J. Durbin and J.M. Evans (1975), “Techniques for Testing the Constancy of Regression Relations over Time”, Journal of the Royal Statistical Society, 37(2), 149-192.

Chester, E. (1978), “Military Spending and Capitalist Stability”, Cambridge Journal of Economics, 2(3), 293-298.

Compton, C. (2004), “All Men Created Unequal: Trends and Factors of Inequality in the United States”, Issues in Political Economy, 13, 1-20.

Dunne, J.P., E. Nikolaidou and A. Roux (2000), “Defence Spending and Economic Growth in South Africa: A Supply and Demand Model”, Defence and Peace Economics, 11(4), 573-585.

Dunne, J.P. and D. Vougas (1999), “Military Spending and Economic Growth in South Africa: A Causal Analysis”, The Journal of Conflict Resolution, 43(4), 521-537.

Ekong, C.N. and E.L. Effiong (2015), “Oil Price Shocks and Nigeria’s Macro Economy: Disentangling the Dynamics of Crude Oil Market Shocks”, Global Business Review, 16(6), 920-935.

Elveren, A.Y. (2012), “Military Spending and Income Inequality: Evidence on Cointegration and Causality for Turkey, 1963-2007”, Defence and Peace Economics, 23(3), 289-301.

Engle, R.F. and C.W.J. Granger (1987), “Cointegration and Error Correction: Representation, Estimation and Testing”, Econometrica, 55(2), 251-276.

Faini, R., P. Annez and L. Taylor (1984), “Defence Spending, Economic Structure, and Growth: Evidence among Countries and over Time”, Economic Development and Cultural Change, 32(3), 487-498.

Heltberg, R., K. Simler and F. Tarp (2004), Public Spending and Poverty in Mozambique, in: T. Addison, H. Hansen, F. Tarp (Eds), “Debt Relief for Poor Countries”, Palgrave/Macmillan: London (pp. 209-240).

Hirnissa, M.T., M.S. Habibullah and A.H. Baharom (2009), “Defence Spending and Income Inequality: Evidence from Selected Asian Countries”, Modern Applied Science, 3(5), 96-111.

Iyke, B.N. and S.Y. Ho (2017), “Income Inequality and Growth: New Insights from Italy”, Economia Internazionale/International Economics, 70(4), 419-442.

Jaumotte, F., S. Lall and C. Papageorgiou (2008), “Rising Income Inequality: Technology, or Trade and Financial Globalization?”, IMF Working Paper WP/08/185.

Kentor, J., A.K. Jorgenson and E. Kick (2012), “The “New” Military and Income Inequality: A Cross National Analysis”, Social Science Research, 41(3), 514-526.

Kwiatkowski, D., P.C.B. Phillips, P. Schmidt and Y. Shin (1992), “Testing the Null Hypothesis of Stationarity against the Alternative of a Unit Root: How Sure are we that Economic Time Series have a Unit Root?”, Journal of Econometrics, 54(1-3), 159-178.

Lin, E.S. and H.E. Ali (2009), “Military Spending and Inequality: Panel Granger Causality Test”, Journal of Peace Research, 46(5), 671-685.

Lipow, J. and C.M. Antinori (1995), “External Security Threats, Defence Expenditures, and the Economic Growth of Less-Developed Countries”, Journal of Policy Modelling, 17(6), 579-595.

Meng, B., W. Lucyshyn and X. Li (2015), “Defence Expenditure and Income Inequality: Evidence on Co-Integration and Causality for China”, Defence and Peace Economics, 26(3), 327-339.

Milanovic, B. (2011), “More or Less”, Finance and Development, 48(3), 6-11.

Mosikari, J. and K. Matlwa (2014), “An Analysis of Defence Expenditure and Economic Growth in South Africa”, Mediterranean Journal of Social Sciences, 5(20), 2769-2776.

Musai, M., M.F. Abhari andR.K. Hemat (2011), “Income Distribution and Economic Growth in Iran”, European Journal of Social Sciences, 20(3), 416-424.

Mylonidis, N. (2008), “Revisiting the Nexus between Military Spending and Growth in the European Union”, Defence and Peace Economics, 19(4), 265-272.

Ndlovu-Gatsheni, S. (2012), “Beyond the Equator there are no Sins. Coloniality and Violence in Africa”, Journal of Developing Societies, 28(4), 419-440.

Park, J.Y. (1992), “Canonical Cointegrating Regressions”, Econometrica, 60(1), 119-143.

Pesaran, H.M., Y. Shin and R.J. Smith (2001), “Bounds Testing Approaches to the Analysis of Level Relationships”, Journal of Applied Econometrics, 16(3), 289-326.

Raza, S.A., M. Shahbaz and S.R. Paramati (2017), “Dynamics of Military Expenditure and Income Inequality in Pakistan”, Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 131(3), 1035-1055.

Roberts, J. (2014), “Your Place or Mine? Beliefs about Inequality and Redress Preferences in South Africa”, Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 118(3), 1167-1190.

Russett, B. (1982), “Defence Expenditures and National Well-Being”, The American Political Science Review, 76(4), 767-777.

Shahbaz, M., R. Sherafatian-Jahromi, M.N. Malik, M.S Shabbir and F.A. Jam (2016), “Linkages between Defence Spending and Income Inequality in Iran”, Quality and Quantity, 50(3), 1317-1332.

Sharif, A. and S. Afshan (2018), “Does Military Spending Impede Income Inequality? A Comparative Study of Pakistan and India”, Global Business Review, 19(2), 257-279.

Soudien, C., V. Reddy and I. Woolard (2019), Poverty and Inequality in South Africa: The State of the Discussion in 2018, in: C. Soudien, V. Reddy, I. Woolard (Eds), “Poverty & Inequality: Diagnosis Prognosis Responses: State of the Nation”, HSRC Press: Pretoria, South Africa, (pp. 1–28).

Statistics South Africa (Stats SA). (2014), “Poverty Trends in South Africa: An Examination of Absolute Poverty between 2006 and 2011”, Report No. 03-10-06. Pretoria. South Africa.

Statistics South Africa (Stats SA). (2017), “Poverty Trends in South Africa: An Examination of Absolute Poverty between 2006 and 2015”, Report No. 03-10-06. Pretoria. South Africa.

Stevenson, P. (1974), “A Defence of Baran and Sweezy”, American Journal of Sociology, 79(6), 1456-1459.

Töngür, U. and A. J. Elveren (2015), “Military Expenditures, Inequality, and Welfare and Political Regimes: A Dynamic Panel Data Analysis”, Defence and Peace Economics, 26(1), 49-74.

Vadlamannati, K.C. (2008), “Exploring the Relationship between Military Spending and Income Inequality in South Asia”, William Davidson Institute Working Paper No. 918, University of Michigan.

Wolde-Rufael, Y. (2016a), “Defence Spending and Income Inequality in Taiwan.” Defence and Peace Economics, 27(6), 871-884.

Wolde-Rufael, Y. (2016b), “Military Expenditure and Income Distribution in South Korea”, Defence and Peace Economics, 27(4), 571-581.

World Bank (2018), Overcoming Poverty and Inequality in South Africa: An Assessment of Drivers, Constraints and Opportunities, World Bank: Washington, DC, available at: <https://openknowledge.worldbank.org/handle/10986/29614>.

World Development Indicators (2020), World Development Indicators, The World Bank, Retrieved from: <http://data.worldbank.org/country>.

Register your account

First-time users should click on “Register your account” and enter the requested information. Upon successful registration, you will receive an e-mail with instructions to verify your registration.

Submission Guidelines

Authors’ login

Use the assigned user ID and password to login. Please, do not register again. Usernames and passwords may be changed after.

Quick search by author:
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Back to the top

Institute for International Economics
of the Genoa Chamber of Commerce


Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)
www.ge.camcom.gov.it