Military Keynesianism and East Asia

Expectations have been high that East Asia would provide the growth engine for the global economy in the twenty first century. At the same time, it has become increasingly clear that these economies face headwinds, not least in north-east Asia from accelerated demographic aging, leading to fears that these economies, too, face the prospect of secular stagnation, and that Japan’s ‘lost decades’ could spread much further afield. With geopolitical tensions in East Asia there is a possibility of a coming countermovement, in the form of military Keynesianism to stimulate economic growth. A large literature has debated the economic effects of military spending and while there is no consensus, there is little support for any belief that military spending is a good way of stimulating the economy. This paper reviews the finding of the literature and considers its relevance and its implications for East Asia. It then considers whether there is consistent evidence to support the military Keynesian arguments, through a brief discussion of the countries and an empirical analysis of available data. It finds little evidence to support simple military Keynesian arguments.