Abstract
This paper investigates the relationship between defence expenditure and economic growth proxy by gross domestic product (GDP). In addition to these variables, a number of macroeconomic variables, which include exchange rate (EXRT),inflation rate (INF),lending rate(LR),gross capital formation (GCF) and unemployment (UN}, were included in the model. The period of Structural Adjustment Programme ( SAP) was also included as dummy variable to capture the impact of policy changes. Cointegration and vector error correction mechanism were employed to model the series. Results show that all the variables have a long run relationship. There is a positive relationship between milex and economic growth in the long run, as well as in the short run. However, the variance decomposition results reveal very little contribution of the military sector to the variables employed. The paper recommends that the present level of funding of the military should be sustained.