Insecurity –Economic Growth and Development Nexus; the Moderating Role of Government Expenditure on Security in Nigeria

Volume 11, Number 2

Insecurity –Economic Growth and Development Nexus; the Moderating Role of Government Expenditure on Security in Nigeria

Authors

LukmanLawali ¹, Bashir Umar Faruk ² and NamadinaHamza ², ¹ Zamfara State University Talata Mafara, Nigeria, ² Federal University Gusau, Nigeria

Abstract

This study uses quarterly data from 1985Q1 to 2024Q4 to investigate the dynamic relationship between insecurity and economic growth in Nigeria within an ARDL-ECM framework, real GDP was estimated as a function of military expenditure (LMEP), terrorism risk index (LTRI), political stability (LPS), and unemployment (LUEM). Unit-root tests reveal a mix of I(0) and I(1) series, supporting ARDL bounds testing; the bound test provides evidence of co integration. Short-run estimates suggest that increases in military spending and terrorism risk have a negative impact on GDP. Long-run estimates indicate a positive but statistically weak relationship between military spending and GDP, as well as an adverse effect of political instability, highlighting the complex, time-varying channels through which insecurity affects growth. As a result, the study recommends shifting security spending towards targeted, transparent, performance-based interventions that stabilize local economies, address root causes of youth unemployment and rural underdevelopment, and protect key productive sectors while diversifying the revenue base. These policies, when combined with fiscal buffers, will reduce the short-run crowding-out effect of security shocks while also creating conditions for Nigeria's long-term growth and development.

Keywords

ARDL, Economic Growth, Economic Development, Insecurity, Nigeria.