Public Education and Defence Spending in Nigeria: Implications for Economic Growth

Abstract

In this study, we examined the proposition that military expenditures “crowd-out” expenditures on education in Nigeria
during the period 1973-2006 for which we obtained a fairly consistent data. Data for the study were obtained from the Statistical
Bulletin of the Central Bank of Nigeria and the Peace Research Institute (SIPRI). A VAR model was estimated using the
variables of the model. Forecast error variance decomposition and impulse response functions derived from the VAR enabled us
to investigate the dynamic relationship between defence spending and expenditure on education. The result indicates that
defence spending in Nigeria ‘crowds-in’ expenditures on education. The study revealed that there is a positive and significant
relationship between defence spending and education expenditures. The study also found a negative and significant relationship
between expenditures on education and economic growth as well as defence spending and economic growth. This indicates
that the levels of funding of the two sectors are inadequate to stimulate economic growth. The paper recommends increased
funding to the education and defence sectors.