Long-run Nexus and Causality Tests Between Increased Military Expenditure, Employment, Technological Innovation and Economic Growth in Ghana

Abstract

Peace and the long-run sustainable economic development processes are any government’s prime twin goals and/or agendas. This study aimed to quantitatively investigate and analyse the long-run relationship and causality tests between increased defence and military expenditure, employment, technological innovation and economic growth and development in Ghana: 2013-2023. A multivariate regression model with the Keynesian growth model based on the augmented production function is used to achieve the goal and objectives of the study. The panel autoregressive distributed lag (ARDL) pooled mean group (PMG) technique is applied in addition to robust least squares, and fixed-effect estimates are implemented to ensure the robustness of the obtained results. The Levin-Lin-Chu unit root test, Im- Peseran-Shin unit root test, Breusch and Pagan Lagrangian Multiplier (BP LM) test, and the Hausman test, Pairwise Dumitrescu Hurlin panel test give evidence of a bi-directional causality between defence/military expenditure and economic growth and development. These related estimates strongly support that defence and military expenditure is beneficial to long-term employment creation and technological innovation relative to economic growth and development. The empirical findings of this study suggest that policymakers need to balance the design of defence and military expenditure within budgetary allocation to stimulate economic growth and development as part of the process of improving the socio-economic well-being of their respective citizens.