IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v36y1997i4p791-808.html
   My bibliography  Save this article

Military Expenditures and Economic Growth in Pakistan

Author

Listed:
  • Nasir M. Khilji

    (U.S. Bureau of the Census, and U.S./Saudi Arabian Joint Commission for Economic Cooperation, Riyadh, Saudi Arabia.)

  • Akhtar Mahmood

    (Government of Pakistan.)

Abstract

This paper explores the impacts of defence expenditures on economic growth and other major economic variables in the Pakistan economy over the period 1972-1995. The results of Granger-causality tests show that there is bi-directional feedback between the defence burden and GDP growth. We test four different single equation models that are widely used in the defence literature. In these frameworks we generally find the defence burden to be negatively related to GDP growth. Finally, we specify a three-equation model which explains GDP growth, average propensity to save, and the defence ratio. In single equation estimations of the savings ratio and the defence burden, we uncover some interesting relationships. The savings ratio is affected positively by the defence ratio, and negatively by the inflation rate. The Pakistani defence burden is impacted negatively by the Indian defence burden and positively by the government budget. When all three equations are estimated as a system to account for feedback and covariance between these equations, these effects are diminished and go down in statistical significance.

Suggested Citation

  • Nasir M. Khilji & Akhtar Mahmood, 1997. "Military Expenditures and Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(4), pages 791-808.
  • Handle: RePEc:pid:journl:v:36:y:1997:i:4:p:791-808
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/1997/Volume4/791-808.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. Smith, R P, 1989. "Models of Military Expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(4), pages 345-359, Oct.-Dec..
    3. Nelson, Michael A & Singh, Ram D, 1994. "The Deficit-Growth Connection: Some Recent Evidence from Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 43(1), pages 167-191, October.
    4. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    5. Smith, R P, 1977. "Military Expenditure and Capitalism," Cambridge Journal of Economics, Oxford University Press, vol. 1(1), pages 61-76, March.
    6. Ido Oren, 1994. "The Indo-Pakistani Arms Competition," Journal of Conflict Resolution, Peace Science Society (International), vol. 38(2), pages 185-214, June.
    7. Grossman, Herschel I., 1995. "Insurrections," Handbook of Defense Economics,in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 8, pages 191-212 Elsevier.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Habibullah, M.S. & Law, Siong-Hook & Dayang-Afizzah, A.M., 2008. "Defense spending and economic growth in Asian economies: A panel error-correction approach," MPRA Paper 12105, University Library of Munich, Germany.
    2. Tiwari, Aviral & Shahbaz, Muhammad, 2011. "Does Defence Spending Stimulate Economic Growth in India?," MPRA Paper 30880, University Library of Munich, Germany, revised 18 Apr 2011.
    3. Shahbaz, Muhammad & Leitão, Nuno Carlos & Uddin, Gazi Salah & Arouri, Mohamed & Teulon, Frédéric, 2013. "Should Portuguese economy invest in defense spending? A revisit," Economic Modelling, Elsevier, vol. 35(C), pages 805-815.
    4. Abdul Jalil & Hafiz Khuram Nadeem Abbasi & Nazia Bibi, 2016. "Military expenditures and economic growth: allowing structural breaks in time series analysis in the case of India and Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(4), pages 1487-1505, July.
    5. Zafar Iqbal & Ghulam Mustafa Zahid, 1998. "Macroeconomic Determinants of Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(2), pages 125-148.
    6. Ali, Amjad & Ur Rehman, Hafeez, 2015. "Macroeconomic Instability and Its Impact on Gross Domestic Product: An Empirical Analysis of Pakistan," MPRA Paper 71037, University Library of Munich, Germany.
    7. Shahrukh Khan, 2013. "The military and economic development in Pakistan," Chapters,in: Capitalism on Trial, chapter 4 Edward Elgar Publishing.
    8. Ali, Wajid & Munir, Kashif, 2016. "Testing Wagner versus Keynesian Hypothesis for Pakistan: The Role of Aggregate and Disaggregate Expenditure," MPRA Paper 74570, University Library of Munich, Germany.
    9. repec:ipg:wpaper:2014-380 is not listed on IDEAS
    10. Muhammad Shahbaz & Talat Afza & Muhammad Shahbaz Shabbir, 2013. "Does Defence Spending Impede Economic Growth? Cointegration And Causality Analysis For Pakistan," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(2), pages 105-120, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:36:y:1997:i:4:p:791-808. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal). General contact details of provider: http://edirc.repec.org/data/pideipk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.