Arms Trade and Economic Growth Nexus in the Post 9/11 Scenario

In this paper we have explored the nexus of arms trade with economic growth using a balance panel of 26 high income and upper middle income countries as the whole sample and 19 high income countries and 7 middle income countries as sub samples. Using fixed effect and random effect models after applying the appropriate diagnostic tests, our results give interesting insights. For the whole sample 26 high and upper middle income countries our results show that arms trade has a positive impact on economic growth. But for the sub samples we find that for high income countries the impact of arms trade on growth is positive, while there is no effect on upper middle income countries.