Public Education Expenditure and Defence Spending in Nigeria: An Empirical Investigation

Abstract

In this study, we set out to empirically investigate the empirical relationship between public education expenditure and defence spending in Nigeria, using annual time series data from 1970 to 2003. Some statistical tools are employed to explore the relationship between these variables. The study examines stochastic characteristics of each time series by testing their stationarity using Augmented Dickey Fuller (ADF) and Phillip Perron (PP) tests. This is followed by estimating the error correction model of public education expenditure. The effects of stochastic shocks of public education expenditure and defence spending are explored, using vector autoregressive (VAR) model. Although it is contended by some that the military may contribute towards the promotion of the modernization of developing societies through the enhancement of the quality and quantity of human capital by, among others, dismantling social rigidities, there is limited conclusive evidence to support this view. In fact, a negative trade-off between defence spending and public education expenditure (used as a proxy for human capital formation) is generally expected. A regression analysis of the relationship between military spending and public education expenditure in Nigeria between 1970 and 2003 is positive and statistically significant in all the techniques employed. It should be pointed out that the statistical analyses conducted in this study are concerned only with reported public expenditures on education. Inasmuch as private education and private expenditures on public education are excluded, the data employed understate the country's commitment to education. With this caveat in mind, the study concludes that it is not unlikely that military activity has served to enhance the productive capability of the Nigerian economy via some modernizing effect. Thus, in the short and long run, the impact of military expenditure on Nigeria's stock of human capital, particularly education, has been positive.