The Effect of Military Expenditure on Economic Growth and environmental quality in Uganda.

Abstract

This research aims to empirically investigate how military expenditure (ME) relates with economic growth (GDP) and environmental quality (CO₂) in Uganda from 1990-2022 using a flexible autoregressive distributed lag (ARDL) model and Toda-Yamamoto Granger causality test. The results showed that in the long run, ME is positively related to GDP but the result is insignificant. However, in the long run, the effect of ME on CO₂ is positive and statistically significant. Furthermore, the short run effect of ME on GDP is negative but insignificant while on CO₂, the effect of ME is positive and significant. Additionally, the causality test results revealed a unidirectional causality running from ME to GDP and ME to CO₂. Also, a bidirectional causality flows from population growth (PG) to GDP and CO₂ while a unidirectional causality flows from gross capital formation (GCF) to GDP and CO₂. From these results, Uganda policymakers should encourage military spending since it yields a positive effect on economic growth but should keep in mind of the environmental quality to align with Sustainable Development Goal 13. However, other sectors of the economy like education, agriculture should not be abandoned.