Journal Press India^®

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Purpose: To empirically investigate the empirical relationship between the public education expenditure and the defence spending in Nigeria, using annual-time-series data, from 1970 to 2003. This study attempts to examine the interactions between defence spending and public education expenditure in Nigeria, with a view to quantifying the effects for the country. Design/Methodology/Approach: Appropriate statistical tools are employed to explore the relationship between these variables. It 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. Findings: Past public education expenditure shocks has a positive but declining relationship with current public education expenditure in the first two years and the relationship thereafter turns negative. However, a positive defence spending shocks increase public education expenditure significantly in the first two-year periods but decline thereafter. These results of the impulse responses of defence spending shocks are consistent with other findings. Research Limitations: Comparison between other countries would have carried out with same parameters. Managerial Implications: In the short and long run, the impact of military expenditure on Nigeriaís stock of human capital, particularly education, is positive. Originality/Value: This research paper has described that military activity has served to enhance the productive capability of the Nigerian economy via some modernizing effect which is original in nature.

Keywords

Human Capital, Public Education Expenditure, Defence Spending, Error Correction Mechanism, and Vector Autoregressive Model.

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