Military Spending and Crowding-Out Effects: Evidence from Sub-Saharan Africa
IMF Working Papers, April 10, 2026
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- Military Spending and Crowding-Out Effects: Evidence from Sub-Saharan Africa
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Bibliographic details
- Authors: Antonio David, Elisee Miningou, Rasmané Ouedraogo, Makoto Tanaka, Alex Vaval Pierre-Charles
- Published: April 10, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229042444.001
Scope and data
- Sample: 33 sub-Saharan African (SSA) economies.
- Period covered: 1990-2023.
- Publication: IMF Working Paper (Working Paper No. 2026/069; Pages: 35; Issue: 069; Volume: 2026; DOI: https://doi.org/10.5089/9798229042444.001).
Methods and identification strategies
- Estimation approach: local projections.
- Identification strategies applied:
- Shocks identified through military spending surges.
- Shocks identified through a fiscal reaction function.
- Instrumental variables (IV) estimates to address endogeneity concerns.
Key empirical findings
- Results from surge-based specifications and fiscal reaction function specifications:
- Yield mixed results that typically are neither economically nor statistically significant.
- Instrumental variables estimates:
- A one-standard-deviation increase in the share of military spending in total government expenditure reduces the shares of education and health spending by about 1 percentage point over the medium-term.
- Timing and sectoral differences:
- Crowding-out effects tend to materialize sooner for health expenditures, likely because health has a larger discretionary component.
- Education spending exhibits more rigidities, delaying or muting immediate crowding-out effects.
- Conditional findings:
- Military spending shocks tend to crowd-out health expenditures when access to international aid is limited.
- There is no evidence of crowding-out of health expenditures when aid is relatively amply available.
- Non-significant factors:
- Overall debt levels are not significant determinants of the extent of crowding-out effects of military expenditure.
- The state of the business cycle is not a significant factor in determining crowding-out effects.
Policy-relevant implications
- Where international aid is limited, increases in military spending can meaningfully displace health spending in SSA, implying trade-offs for fiscal prioritization and external financing strategies.
- The discretionary nature of health budgets suggests quicker budgetary adjustments to accommodate military spending shocks; education budgets may require targeted policies to protect spending given their rigidity.
- Standard macro indicators such as overall debt levels and contemporaneous business-cycle conditions may not predict the extent of crowding-out; identification of external financing conditions (aid availability) is important for assessing social spending vulnerability to military shocks.
Military Spending and Crowding-Out Effects: Evidence from Sub-Saharan Africa; Antonio David, Elisee Miningou, Rasmané Ouedraogo, Makoto Tanaka, Alex Vaval Pierre-Charles; April 10, 2026.
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