The Effects of Defense and Security on Capital Formation in Africa: An Empirical Investigation
Abstract
This note is an attempt to quantify the economic effects of the military's primary function, that of providing security. Specifically, it seeks to determine whether the positive effects on investment of increased security outweigh the resource costs in forgone investment of defense. An econometric model is constructed and applied to data from 27 Sub-Saharan African countries from 1971 through 1981. The results clearly support the hypothesis that a well equipped and well trained army can induce additional investment presumably through its security enhancing effects. We find that countries that are threatened and thus suffer from a low level of security have reduced gross fixed capital formation. However, countries that devote more resources to defense have higher gross fixed capital formation, presumably because the increased defense expenditures also increase security. The same is not true however, for the size of the armed forces. Large armies, especially when they are accompanied by low defense expenditures, have a negative effect on gross fixed capital formation. One can infer that large armies are not security enhancing and may indeed reduce security. Subsaharan Africa; Economic models; Foreign military forces.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1988
- Accession Number
- ADA216899
Entities
People
- Daniel F. Kohler
Organizations
- RAND Corporation