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The Demand for Military Spending in Egypt

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Author Info

  • Aamer S. Abu-Qarn

    (Economics Department,Ben-Gurion University, Israel)

  • J Paul Dunne

    ()
    (Department of Economics, University of the West of England)

  • Yasmine M. Abdelfattah

    (Department of Economics, British University in Egypt)

  • Shadwa Zaher

    (Department of Economics, British University in Egypt)

Abstract

Egypt plays a pivotal role in the security of the Middle East as the doorway to Europe and its military expenditure reflects its involvement in the machinations of such an unstable region, showing considerable variation over the last forty years. These characteristics make it a particularly interesting case study of the determinants of military spending. This paper presents such a study, estimating an econometric model of the Egyptian demand for military spending, taking into account important strategic and political factors. Both economic and strategic factors are found to play a role in determining military burden, with clear positive effects of lagged military burden, suggesting some sort of institutional inertia, plus negative output and net imports effects. The main strategic effect is the impact of Israel’s military burden, with no effect for that of the Jordanian and Syrian allies, but the results also suggest that simple arms race relationships are not an adequate representation of the relevant strategic factors.

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Bibliographic Info

Paper provided by Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol in its series Working Papers with number 1001.

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Length: 22 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:uwe:wpaper:1001

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Keywords: Egypt; demand for military expenditure; political determinants; strategic determinants;

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  1. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 231-254.
  2. Aamer S. Abu-Qarn & J Paul Dunne & Yasmine M. Abdelfattah & Shadwa Zaher, 2010. "The Demand for Military Spending in Egypt," Working Papers, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol 1001, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  3. J. Paul Dunne & Eftychia Nikolaidou & Nikolaos Mylonidis, 2003. "The demand for military spending in the peripheral economies of Europe," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(6), pages 447-460.
  4. BAI, Jushan & PERRON, Pierre, 1998. "Computation and Analysis of Multiple Structural-Change Models," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 9807, Universite de Montreal, Departement de sciences economiques.
  5. Christos Kollias & Suzanna-Maria Paleologou, 2003. "Domestic political and external security determinants of the demand for greek military expenditure," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(6), pages 437-445.
  6. Smith, R P, 1980. "The Demand for Military Expenditure," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 90(363), pages 811-20, December.
  7. Paul Dunne & Sam Perlo-Freeman, 2003. "The Demand for Military Spending in Developing Countries," International Review of Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(1), pages 23-48.
  8. Aamer S. Abu-Qarn & Suleiman Abu-Bader, 2008. "On The Dynamics Of The Israeli-Arab Arms Race," Working Papers, Ben-Gurion University of the Negev, Department of Economics 0809, Ben-Gurion University of the Negev, Department of Economics.
  9. Eftychia Nikolaidou, 2008. "The Demand For Military Expenditure: Evidence From The Eu15 (1961-2005)," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(4), pages 273-292.
  10. J. Paul Dunne & Sam Perlo-Freeman, 2003. "The demand for military spending in developing countries: A dynamic panel analysis," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(6), pages 461-474.
  11. Smith, R P, 1989. "Models of Military Expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 4(4), pages 345-59, Oct.-Dec..
  12. Maizels, Alfred & Nissanke, Machiko K., 1986. "The determinants of military expenditures in developing countries," World Development, Elsevier, Elsevier, vol. 14(9), pages 1125-1140, September.
  13. Smith, Ron, 1995. "The demand for military expenditure," Handbook of Defense Economics, Elsevier, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 4, pages 69-87 Elsevier.
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Cited by:
  1. J Paul Dunne & Sam Perlo-Freeman & Ron P Smith, 2008. "Determining Military Expenditures: Arms Races and Spill-Over Effects in Cross-Section and Panel Data," Discussion Papers, British University in Egypt, Faulty of Business Administration, Economics and Political Science 0801, British University in Egypt, Faulty of Business Administration, Economics and Political Science.
  2. J Paul Dunne & Samuel Perlo-Freeman & Ron P Smith, 2007. "The Demand for Military Expenditure in Developing Countries: Hostility versus Capability," Working Papers, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol 0707, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  3. Aamer S. Abu-Qarn & J Paul Dunne & Yasmine M. Abdelfattah & Shadwa Zaher, 2010. "The Demand for Military Spending in Egypt," Working Papers, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol 1001, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.

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