Institutional Quality and the Crowding-Out Effect of Military Expenditure on Maternal Health in Nigeria

Spending on the military is also increasing in Nigeria, raising fears that it is eroding much needed investments in maternal services. The present investigation examines the effects of state defense expenditure on the maternal mortality rate (MMR) from 2000 to 2024 to determine if better institutions can buffer the impact of defense spending on MMR. Using annual time series data, the analysis does confirm (by applying the bounds testing approach of the Autoregressive Distributed Lag (ARDL) methodology) the long-run cointegrating relationship among the variables is stable. Empirical findings indicate that military spending positively and significantly affects maternal mortality (β = 0.428 with p = 0.018), thus supporting the crowding-out hypothesis. More importantly, the connection term between defence spending and institutional quality is negative and significant (β = −0.186, p = 0.032), meaning that a strong institutional environment has a significant dampening effect on the negative influence of defence spending on maternal health outcomes. MMR is negatively affected by real GDP per capita and public health expenditure, and is negatively affected by a fall in the exchange rate. The error correcting term (−0.682, p = 0.001) implies that the process of adaptation to long-run equilibrium takes place at a relatively quick rate. The results for this paper offer strong support to institutional theory, and constitute an extension of the guns versus butter debate by pointing to governors quality as a critical institutional starting point for fiscal trade-offs in developing countries. The study highlights that while budget reallocation is necessary, institutional changes should be included as an ancillary approach in guaranteeing maternal health in the context of security concerns.