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Size Of The Military Sector And Economic Growth: A Panel Data Analysis Of Africa And Latin America


  • Michael D. Stroup

    () (Stephen F. Austin State University)

  • Jac C. Heckelman

    () (Wake Forest University)


We estimate the influence of defense spending and military labor use on economic growth in African and Latin American countries. Our model integrates disparate implications from the defense economics literature into a Barro-style model of economic growth that controls for political and economic institutional variation across countries. Our panel data analysis of 44 countries in Africa and Latin America from 1975 to 1989 also controls for cross-country variation in lost human capital and public sector production inefficiencies. We find empirical evidence that the defense burden on economic growth is non-linear, with low levels of military spending increasing economic growth but higher levels of military spending decreasing growth. We also find evidence that the influence of military labor use on growth is non-linear, and exhibits a greater drag on economic growth in those countries with relatively higher levels of adult male education attainment.

Suggested Citation

  • Michael D. Stroup & Jac C. Heckelman, 2001. "Size Of The Military Sector And Economic Growth: A Panel Data Analysis Of Africa And Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 4, pages 329-360, November.
  • Handle: RePEc:cem:jaecon:v:4:y:2001:n:2:p:329-360

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    References listed on IDEAS

    1. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, July.
    2. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    3. Blomberg, S Brock, 1996. "Growth, Political Instability and the Defence Burden," Economica, London School of Economics and Political Science, vol. 63(252), pages 649-672, November.
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    Cited by:

    1. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    2. Christos Kollias & Suzanna-Maria Paleologou & Panayiotis Tzeremes & Nickolaos Tzeremes, 2017. "Defence expenditure and economic growth in Latin American countries: evidence from linear and nonlinear causality tests," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-25, December.
    3. Gerhard Reitschuler & Ludger J. Löning, 2004. "Modeling the Defense-Growth Nexus in a Post-Conflict Country - A Piecewise Linear Approach," Ibero America Institute for Econ. Research (IAI) Discussion Papers 097, Ibero-America Institute for Economic Research.
    4. Jac C. Heckelman, 2010. "The Connection between Democratic Freedoms and Growth in Transition Economies," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(2), pages 121-146.
    5. Torun, Huzeyfe, 2014. "Ex-Ante Labor Market Effects of Compulsory Military Service," MPRA Paper 67833, University Library of Munich, Germany.
    6. Jesús Crespo Cuaresma & Gerhard Reitschuler, 2006. "'Guns Or Butter?' Revisited: Robustness And Nonlinearity Issues In The Defense-Growth Nexus," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(4), pages 523-541, September.
    7. Awaworyi Churchill, Sefa & Yew, Siew Ling & Ugur, Mehmet, 2015. "Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis," EconStor Preprints 110901, ZBW - German National Library of Economics.
    8. Jesús Crespo Cuaresma & Gerhard Reitschuler, 2004. "A non-linear defence-growth nexus? evidence from the US economy," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(1), pages 71-82, February.
    9. Katarina Keller & Panu Poutvaara & Andreas Wagener, 2009. "Military Draft And Economic Growth In Oecd Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(5), pages 373-393, October.
    10. Alptekin, Aynur & Levine, Paul, 2012. "Military expenditure and economic growth: A meta-analysis," European Journal of Political Economy, Elsevier, vol. 28(4), pages 636-650.
    11. Pavel Yakovlev, 2007. "Arms Trade, Military Spending, And Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(4), pages 317-338.
    12. Arias Andrés F. & Laura Ardila, 2003. "Military Expenditure and Economic Activity: The Colombian Case," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, September.
    13. Luca Pieroni, 2007. "Military Spending and Economic Growth," Working Papers 0708, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    14. Phiri, Andrew, 2016. "Does military spending nonlinearly affect economic growth in South Africa?," MPRA Paper 69730, University Library of Munich, Germany.
    15. Panu Poutvaara & Andreas Wagener, 2011. "The Political Economy of Conscription," Chapters,in: The Handbook on the Political Economy of War, chapter 9 Edward Elgar Publishing.
    16. Ourania Dimitraki & Faek Menla Ali, 2015. "The Long-run Causal Relationship Between Military Expenditure and Economic Growth in China: Revisited," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(3), pages 311-326, June.
    17. Kimbambu Tsasa Vangu, Jean - Paul, 2012. "Analyse de la Relation Guerres Civiles et Croissance Économique
      [Civil Wars and Economic Growth in DRC]
      ," MPRA Paper 42424, University Library of Munich, Germany, revised 05 Feb 2012.
    18. Sefa Awaworyi & Siew Ling Yew, 2014. "The Effect of Military Expenditure on Growth: An Empirical Synthesis," Monash Economics Working Papers 25-14, Monash University, Department of Economics.
    19. Chen, Pei-Fen & Lee, Chien-Chiang & Chiu, Yi-Bin, 2014. "The nexus between defense expenditure and economic growth: New global evidence," Economic Modelling, Elsevier, vol. 36(C), pages 474-483.
    20. Reitschuler, Gerhard & Loening, Josef L., 2005. "Modeling the Defense-Growth Nexus in Guatemala," World Development, Elsevier, vol. 33(3), pages 513-526, March.
    21. Oliver Vanden Eynde, 2016. "Military Service and Human Capital Accumulation: Evidence from Colonial Punjab," Journal of Human Resources, University of Wisconsin Press, vol. 51(4), pages 10031035-10.
    22. Chien-Chiang Lee & Sheng-Tung Chen, 2007. "Non-Linearity In The Defence Expenditure - Economic Growth Relationship In Taiwan," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 537-555.
    23. Nikolaos Mylonidis, 2008. "Revisiting The Nexus Between Military Spending And Growth In The European Union," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(4), pages 265-272.
    24. Na Hou & Bo Chen, 2013. "Military Expenditure And Economic Growth In Developing Countries: Evidence From System Gmm Estimates," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 183-193, June.

    More about this item


    defense burden; economic growth;

    JEL classification:

    • 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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