The Nexus between Military Spending, Tax Revenues and Economic Growth in the G5 Sahel Countries

Abstract

This article aims to examine the nexus between military spending, tax revenues and economic growth in the G5 Sahel countries. To this end, a VAR model was estimated on a panel of five countries over the period 2000 - 2018. The analysis led to three main results. First, economic growth helps finance military spending, while military spending has a negative effect on economic growth. Second, military spending lagged by a period has a positive effect on tax revenues, while tax revenues have no effect on military spending. Third, tax revenues promote economic growth, and in return, economic growth contributes to increased tax revenues. The study therefore suggests the establishment of a good tax policy in the G5 Sahel countries to mobilize more resources to boost economic growth and to finance military spending.