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The Vicious Cycle of the Foreign Military Debt

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  • Stavrinos, Vasilios G.
  • Zombanakis, George A.

Abstract

This paper aims at estimating first the effects of defense spending on the main determinants of growth, and second the extent to and the channels through which the military debt of Greece influences the overall debt burden of the country, and consequently the critical determinants of economic growth and development. Increased imports of sophisticated weapons and military equipment can be financed at the cost of investment (guns v. ploughshares), or/and at the cost of human capital formation (guns v. butter and chalk), or at the cost of increasing the foreign debt of the country. It is this last case which is investigated in this paper. Our empirical results indicate that whatever the necessity and the benefits of the security aspect of defense, its economic costs are quite substantial. The military as a claimant of resources has a negative and non trivial effect on physical capital accumulation, and human capital formation. Moreover, financing increased military imports through borrowing from abroad has a negative and significant effect on the determinants of growth and development.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17758.

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Date of creation: 02 Mar 1998
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Publication status: Published in European Research Studies 1.1(1998): pp. 5-26
Handle: RePEc:pra:mprapa:17758

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Keywords: Key Words: Defense Burden; Foreign Military Debt; Growth Rate; Investment; Education.;

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References

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  1. Ã…dne Cappelen & Nils Petter Gleditsch & Olav Bjerkholt, 1984. "Military Spending and Economic Growth in the OECD Countries," Journal of Peace Research, Peace Research Institute Oslo, Peace Research Institute Oslo, vol. 21(4), pages 361-373, December.
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Cited by:
  1. ANDREOU, A. S. & PARSOPOULOS, K. E. & VRACHATIS, M. N. & Zombanakis, George A., 2002. "Searching for the Optimal Defence Expenditure: An Answer in the Context of the Greek – Turkish Arms Race," MPRA Paper 51580, University Library of Munich, Germany, revised 15 Aug 2002.
  2. Andreou, Andreas S. & Zombanakis, George A., 2001. "A Neural Network Measurement of Relative Military Security: The Case of Greece and Cyprus," MPRA Paper 14539, University Library of Munich, Germany, revised 2001.
  3. A. S. Andreou & K. E. Parsopoulos & M. N. Vrahatis & G. A. Zombanakis, 2004. "An alliance between Cyprus and Greece: assessing its partners' relative security contribution," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 15(5), pages 481-495.
  4. Andreou, Andreas S. & Zombanakis, George A., 2003. "Intelligent information systems for defence problems," MPRA Paper 38637, University Library of Munich, Germany.
  5. Andreou Andreas S. & Zombanakis George A. & Migiakis Petros M., 2013. "On Defence Expenditure Reduction: Balancing Between Austerity and Security in Greece," Peace Economics, Peace Science, and Public Policy, De Gruyter, De Gruyter, vol. 19(3), pages 437-458, December.
  6. A. S. Andreou & K. E. Parsopoulos & M. N. Vrahatis & G. A. Zombanakis, 2002. "Optimal versus required defence expenditure: The case of the Greek-Turkish arms race," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(4), pages 329-347.
  7. Andreou, Andreas S. & Zombanakis, George A., 2000. "Financial Versus Human Resources in the Greek-Turkish Arms Race: A Forecasting Investigation Using Artificial Neural Networks," MPRA Paper 13892, University Library of Munich, Germany.

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