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The Impact of Worldwide Military Spending Cuts on Developing Countries

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  • Bayoumi, Tamim
  • Hewitt, Daniel
  • Symansky, Steven

Abstract

This paper investigates the economic impact of a coordinated reduction in military expenditures of 20 percent using a specially modified version of the MULTIMOD world economic model. Simulation results indicate that in developing countries the present value of consumption increases by 46 percent of 1992 GDP, compared to military expenditures cuts, in present value terms, of 33 percent of 1992 GDP. The gains reflect both the release of domestic resources and a positive international economic externality due to enhanced trade and lower world interest rates. Accordingly, the net debtor developing country gains exceed those of industrial countries. Examination of individual developing country economies confirms the significance of the external trade effect on the pattern and level of gains.
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  • Bayoumi, Tamim & Hewitt, Daniel & Symansky, Steven, 1998. "The Impact of Worldwide Military Spending Cuts on Developing Countries," Journal of Policy Modeling, Elsevier, vol. 20(3), pages 261-303, June.
  • Handle: RePEc:eee:jpolmo:v:20:y:1998:i:3:p:261-303
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    1. Ronnie Lowenstein & Richard Peach, 1992. "The impact of the current defense build-down," Quarterly Review, Federal Reserve Bank of New York, issue Aut, pages 59-68.
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    Cited by:

    1. Rémy Herrera, 2005. "Un renouveau de l'économie du développement ?," Cahiers de la Maison des Sciences Economiques r05075, Université Panthéon-Sorbonne (Paris 1).

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