Acta Universitatis Danubius. Œconomica, Vol 15, No 5 (2019)

Abstract

The effect of military expenditure on growth is a longstanding debate in defence economics and peace literatures.  We investigated the combined impact of military expenditure and Institutional quality on South Africa Inclusive growth. We add to this literature by constructing an inclusive growth index for South Africa so as to capture the joint real effect of military expenditure and institutional quality. We used only corruption as a reliable proxy for institutional quality, since corruption is often a symptom of bad institution. Using data from 1984 to 2017, our result suggests that the impact of military expenditure on South Africa inclusive growth is positive and significant whereas military expenditure impact in the presence of corruption retards South Africa inclusive growth.