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Measuring The Peace Dividend: Evidence From Developing Economies

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  • Rabia Aslam

Abstract

The paper attempts to trace the nexus between defense spending and economic growth in developing countries, using data for 59 developing countries from 1972-2000. The purpose is to measure the opportunity costs of defense spending mainly in terms of alternative public programs. The correlation of social sector expenditures with growth rate as well as the extent of correlation between social and defense sector spending is not clear in the majority of developing countries. It follows that even if defense spending is reduced, the prospects for a peace dividend in the aftermath of the Cold War might be inhibited by political interests that oppose increases in social sector expenditures. If so, defense cutbacks might not lead to a welfare windfall as is generally presumed. Accordingly, this paper tests whether a defense spending cutback will enhance funding for other public programs and whether such a reallocation of resources will prove to be beneficial for the long-term growth rate of the economy.

Suggested Citation

  • Rabia Aslam, 2007. "Measuring The Peace Dividend: Evidence From Developing Economies," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(1), pages 39-52.
    • Handle: RePEc:taf:defpea:v:18:y:2007:i:1:p:39-52
    DOI: 10.1080/10242690600924620
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    Cited by:

    1. Anderton,Charles H. & Carter,John R., 2009. "Principles of Conflict Economics," Cambridge Books, Cambridge University Press, number 9780521875578, December.
    2. Uk Heo & Min Ye, 2016. "Defense Spending and Economic Growth around the Globe: The Direct and Indirect Link," International Interactions, Taylor & Francis Journals, vol. 42(5), pages 774-796, October.
    3. Flávia de Holanda Schmidt Squeff & Lucas Rocha Soares de Assis, 2015. "The Defense Industry in Brazil: Characteristics and Involvement of Supplier Firms," Discussion Papers 0195, Instituto de Pesquisa Econômica Aplicada - IPEA.
    4. Joaquim José Martins Guilhoto & Paulo César Morceiro, Milene Simone Tessarin, 2016. "Productive Complex of Defense and Security in Brazil: dimension, sectoral and technological impacts," Working Papers, Department of Economics 2016_28, University of São Paulo (FEA-USP).
    5. W. Robert J. Alexander, 2015. "The Keynesian IS-MR Model and Military Spending," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(2), pages 213-221, April.

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