International Journal of Academic Accounting, Finance & Management Research (IJAAFMR)   Year: 2022 | Volume: 6 | Issue: 8 | Page No.: 24-40 Military Spending and Influx of Foreign Direct Investment in Nigeria: A Security-Oriented Perspective Download PDF Ubong Edem Effiong Supper Roland Okijie & Ubong Ekerete Udonwa Abstract: Nigeria is being ravaged with high insecurity threat with attendant deleterious influence on the investment climate of the nation. Empirically examining the influence of military expenditure on foreign direct investment (FDI) inflow in Nigeria from 1970 through 2020 was the core intent of this study. The autoregressive distributed lag approach of Bounds test and error correction model were utilized given that the time series variables were stationary at levels and first difference, as reported by the 'Augmented Dickey-Fuller' unit root test under the constant and trend assumption. Further, the threshold regression was utilized to detect the level of military expenditure that is sustainable for FDI inflow. The Bounds test revealed that a long-run relationship do exist between military expenditure and FDI inflows within the era of analysis. The short-run ARDL result portrayed that changes in military expenditure put forth a negative but inconsequential influence on FDI inflow, but the one-period lag posed a positive and substantial weight. Similar to the short-run result, the long-run result revealed that military expenditure posed a negative and significant impact on FDI. The threshold level for military spending was estimated to be 7.75%. The negative effect which is significant in the long-run is the outcome of the rising trend of insecurity in the country in recent times, thereby calling for improved military spending specifically at the threshold level to curb the insecurity ravaging the nation; with attendant reassurance of foreign investors to channel their capital into Nigeria.