Spatial effects of defense spending on social welfare in West Africa

In West Africa, defense spending is rising rapidly, whereas the population’s level of social welfare is improving at a relatively slow pace. This crowding-out effect resulting from public-sector military spending challenges the traditional approach to the fiscal multiplier. This paper therefore examines the spillover effects of the defense burden on social welfare in Economic Community of West African States (ECOWAS) countries over the period 2000–2019. To achieve this objective, we formalize a budget constraint model and test the spatial autocorrelation between the variables using Moran’s, Geary’s and the Lagrange multiplier tests. We then adopt a spatial Durbin model. Based on a matrix of four spatial dimensions (maritime, economic, geographical and cultural), the results show that welfare in ECOWAS countries is negatively influenced by each country’s own public military expenditure and positively influenced by neighboring countries. As implications, ECOWAS countries must join forces on spending policy by adopting a participatory and coordinated budgetary compromise. The aim is to improve social welfare, both at the level of each country and across the region as a whole.