Education and Military Expenditures: Countervailing Forces in Designing Economic Policy. A Contribution to the Empirics of Peace

This paper contributes to the empirical analysis of social peace, specifically aiming to assess the suitability of an economic policy instrument for the maintenance of social peace. The contention advanced in this paper is that identifying the ratio of public education investment to military expenditure (hereafter referred to as Edumilex) serves as a pertinent instrument for fostering peaceful economic policies. To empirically evaluate this instrument, we employ a target variable serving as a measure of internal peace, structured as a concise metric of positive peace based on four pillars: (i) Health; (ii) Standard of living; (iii) Quality of institutions; (iv) Spread of violence. More precisely, we empirically estimate the impact of Edumilex on social peace, utilizing a panel comprising 85 countries spanning the years from 1990 to 2020. We utilize an Instrumental Variable approach. In particular, in the baseline estimation we employ an IV/GMM estimator. The robust and positive relationship identified in our analysis suggests the viability of Edumilex as an instrument of economic policy. This proposition constitutes a noteworthy innovation since governments commonly perceive education and military spending as distinct policy domains. However, in the light of this work, such a perspective appears flawed, as these factors both exert influence on the levels of peace within a society.