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Spend on what? Insights on military spending efficiency

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  • Dimitriou, Dimitrios
  • Goulas, Eleftherios
  • Kallandranis, Christos

Abstract

This study investigates the role of military sector efficiency on the economic growth-defence spending relationship in 135 countries from 1992 to 2020. Efficiency stems from capital intensity of the military sector and the existence of technological externalities and economies of scale associated with armaments exports. Our findings indicate that a higher level of efficiency can moderate or eliminate the adverse effects of military burden on economic growth. Introducing alliance participation, we highlight the ‘protective’ role of NATO for its member-states with lower efficiency levels, while SCO seems to be less supportive.

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  • Dimitriou, Dimitrios & Goulas, Eleftherios & Kallandranis, Christos, 2025. "Spend on what? Insights on military spending efficiency," European Journal of Political Economy, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:poleco:v:88:y:2025:i:c:s0176268025000564
    DOI: 10.1016/j.ejpoleco.2025.102696
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    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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