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Defence Spending, Institutional Environment and Economic Growth: Case of NATO

Author

Listed:
  • Natalia Utrero-Gonzalez

    (Centro Universitario de la Defensa de Zaragoza, Academia General Militar)

  • Jana Hromcová

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Francisco J. Callado-Muñoz

    (Centro Universitario de la Defensa de Zaragoza, Academia General Militar)

Abstract

This paper analyses the impact of participating in a military alliance on the nexus between defence spending and economic growth. In particular, we study how the process of gradual association to a military organization influences the defence spending of new-comers, and consequently their economic growth. Conclusions from the theoretical model are tested empirically for countries in the North Atlantic Treaty Organization. Results show that the prospect of intensified military alliance partnership and membership has a positive effect on economic growth. In addition, increased security and stability gained by closer military cooperation reinforces the positive link with economic growth. Empirical evidence supports theoretical priors.

Suggested Citation

  • Natalia Utrero-Gonzalez & Jana Hromcová & Francisco J. Callado-Muñoz, 2017. "Defence Spending, Institutional Environment and Economic Growth: Case of NATO," Working Papers wpdea1704, Department of Applied Economics at Universitat Autonoma of Barcelona.
    • Handle: RePEc:uab:wprdea:wpdea1704
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    Cited by:

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    3. Callado-Muñoz, Francisco J. & Hromcová, Jana & Utrero-González, Natalia, 2023. "Can buying weapons from your friends make you better off? Evidence from NATO," Economic Modelling, Elsevier, vol. 118(C).
    4. Ricardo Ferraz, 2022. "The Portuguese Military Expenditure from a Historical Perspective," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(3), pages 347-365, April.

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    More about this item

    Keywords

    military alliance; defence spending; public spending; growth.;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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