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Military and Economic Growth in ASEAN-5 Countries

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  • Hirnissa, M.T
  • Habibullah, M.S.
  • Baharom, A.H.

Abstract

In this study we employ the bounds testing procedure suggested by Pesaran (2001) and dynamic OLS (DOLS) proposed by Stock and Watson (1993) to test the robustness of the causal effect and long-run relationships between military expenditure and economic growth in ASEAN-5 countries from the year 1965 to 2006. Generally, our results suggest that: (1) there are only three (Indonesia, Thailand, Singapore) out of five countries analyzed exhibit long–run relationship between military expenditure and economic growth; (2) While for the case of Singapore, the causality is bidirectional, for Indonesia and Thailand it is unidirectional from military expenditure to economic growth; and (3) For the remaining countries, (Malaysia and Philippines), no meaningful relationship could be detected. The results are robust, producing similar results employing both ARDL and DOLS.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13108.

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Date of creation: 04 Aug 2008
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Handle: RePEc:pra:mprapa:13108

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Keywords: military expenditure; economic growth; Asean-5;

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  1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  2. Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2003. "Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria," Journal of Policy Modeling, Elsevier, Elsevier, vol. 25(6-7), pages 567-583, September.
  3. Julide Yildirim & Nadir Ocal, 2006. "Arms Race And Economic Growth: The Case Of India And Pakistan," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(1), pages 37-45.
  4. 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, University of Chicago Press, vol. 34(2), pages 361-72, January.
  5. Joerding, Wayne, 1986. "Economic growth and defense spending : Granger Causality," Journal of Development Economics, Elsevier, Elsevier, vol. 21(1), pages 35-40, April.
  6. Kalyoncu, Huseyin & Yucel, Fatih, 2005. "An analytical approach on defense expenditure and economic growth: the case of Turkey and Greece," MPRA Paper 4262, University Library of Munich, Germany, revised 2006.
  7. Kollias, Christos & Manolas, George & Paleologou, Suzanna-Maria, 2004. "Defence expenditure and economic growth in the European Union: A causality analysis," Journal of Policy Modeling, Elsevier, Elsevier, vol. 26(5), pages 553-569, July.
  8. Deger, Saadet, 1986. "Economic Development and Defense Expenditure," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 35(1), pages 179-96, October.
  9. Hannah Galvin, 2003. "The impact of defence spending on the economic growth of developing countries: A cross-section study," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(1), pages 51-59.
  10. 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, University of Chicago Press, vol. 32(3), pages 487-98, April.
  11. Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, Elsevier, vol. 13(1-2), pages 67-83.
  12. Reitschuler, Gerhard & Loening, Josef L., 2005. "Modeling the Defense-Growth Nexus in Guatemala," World Development, Elsevier, Elsevier, vol. 33(3), pages 513-526, March.
  13. Christos Kollias & Charis Naxakisb & Leonidas Zarangasb, 2004. "Defence Spending and Growth in Cyprus: A Causal Analysis," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 15(3), pages 299-307.
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