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The Effects of Defence Expenditures on Economic Growth: A Case Study on Turkey

Author

Listed:
  • Rahman AYDIN

Abstract

This study examines the effects of defence expenditures (DE) on economic growth (EG) between 1990 and 2023. In models where the effects of defence expenditures on economic growth are investigated, the determinants of economic growth are frequently used as control variables. For this reason, the World Uncertainty Index (WUI) is included in the model used in the study. Thus, the study contributes to the literature. On the other hand, the developments in the defence industry in Türkiye in recent years are remarkable. Therefore, the economic and political effects of DE encouraged the preparation of this study. In this study, the AARDL method is used to determine the cointegrated relationship between variables, and then the error correction model is used to obtain long-run findings. According to the findings, fixed capital investments positively affect EG in both the short and long run. While foreign trade deficits affect EG positively in the long run, they affect it negatively in the short run. While the world uncertainty index has a negative effect on EG in the long run, there is no relationship between the variables in the short run. Finally, it is concluded that DE has a positive effect on EG in both the short and long run.

Suggested Citation

  • Rahman AYDIN, 2025. "The Effects of Defence Expenditures on Economic Growth: A Case Study on Turkey," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 4.
    • Handle: RePEc:fis:journl:250416
    DOI: 10.25295/fsecon.1612426
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    References listed on IDEAS

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    1. Oana Ramona Lobont & Oana Ramona Glont & Leonardo Badea & Sorana Vatavu, 2019. "Correlation of military expenditures and economic growth: lessons for Romania," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(6), pages 2957-2968, November.
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    5. Chia-I Pan & Tsangyao Chang & Yemane Wolde-Rufael, 2015. "Military Spending and Economic Growth in the Middle East Countries: Bootstrap Panel Causality Test," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(4), pages 443-456, August.
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    Keywords

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F10 - International Economics - - Trade - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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