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An empirical study of the spin-off effects of military spending

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  • Trish Kelly
  • Meenakshi Rishi
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    Abstract

    The article explores the spin-off effect controversy surrounding the role of military spending in economic development by investigating its impact on output in six industries linked to the military. The article's econometric investigation does not support the case for spin-off effects. The results suggest that military spending's direct impact on output in each industry is negative or insignificant depending on whether adjustments for trade in armaments are made. The results also fail to substantiate physical and human capital spin-off effects. Based on these results, the article concludes that the case for spin-off effects has been exaggerated.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/10242690302938
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Defence and Peace Economics.

    Volume (Year): 14 (2003)
    Issue (Month): 1 ()
    Pages: 1-17

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    Handle: RePEc:taf:defpea:v:14:y:2003:i:1:p:1-17

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    Related research

    Keywords: Military Spending; Spin-off Effects; Industry-level Impact;

    References

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    1. Faini, Riccardo & Annez, Patricia & Taylor, Lance, 1984. "Defense Spending, Economic Structure, and Growth: Evidence among Countries and Over Time," Economic Development and Cultural Change, University of Chicago Press, vol. 32(3), pages 487-98, April.
    2. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    3. B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2, July.
    4. Ball, Nicole, 1983. "Defense and Development: A Critique of the Benoit Study," Economic Development and Cultural Change, University of Chicago Press, vol. 31(3), pages 507-24, April.
    5. Trish Kelly, 1997. "Public Investment and Growth: testing the non-linearity hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 11(2), pages 249-262.
    6. Benoit, Emile, 1978. "Growth and Defense in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 26(2), pages 271-80, January.
    7. Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 67-83.
    8. Deger, Saadet, 1986. "Economic Development and Defense Expenditure," Economic Development and Cultural Change, University of Chicago Press, vol. 35(1), pages 179-96, October.
    9. LaCivita, Charles J. & Frederiksen, Peter C., 1991. "Defense spending and economic growth An alternative approach to the causality issue," Journal of Development Economics, Elsevier, vol. 35(1), pages 117-126, January.
    10. Robert J. Barro, 1991. "A Cross-Country Study of Growth, Saving, and Government," NBER Chapters, in: National Saving and Economic Performance, pages 271-304 National Bureau of Economic Research, Inc.
    11. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
    12. Daniel P. Hewitt, 1991. "Military Expenditure," IMF Working Papers 91/54, International Monetary Fund.
    13. Brumm, Harold J., 1997. "Military Spending, Government Disarray, and Economic Growth: A Cross-Country Empirical Analysis," Journal of Macroeconomics, Elsevier, vol. 19(4), pages 827-838, October.
    14. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-74, June.
    15. Biswas, Basudeb & Ram, Rati, 1986. "Military Expenditures and Economic Growth in Less Developed Countries: An Augmented Model and Further Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 34(2), pages 361-72, January.
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