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Sources of labour productivity: a panel investigation of the role of military expenditure

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  • Sakiru Solarin

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Abstract

The objective of this paper is to examine the effect of military expenditure on productivity performance in 70 countries, over the period 1989–2011. We employ the labour productivity as a measure of productivity, while the military burden is initially utilized as an indicator of the level of military expenditure within the framework of a transcendental production function. Applying the system GMM method, it is observed that defence expenditure exerts a negative and statistically significant effect on labour productivity. The negative impact of military expenditure still holds, when an alternative measure of military spending is introduced into the model. The main policy implication of these results is that the overall productivity would be expected to improve, if military expenditures are replaced by civilian expenditures. Copyright Springer Science+Business Media Dordrecht 2016

Suggested Citation

  • Sakiru Solarin, 2016. "Sources of labour productivity: a panel investigation of the role of military expenditure," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 849-865, March.
  • Handle: RePEc:spr:qualqt:v:50:y:2016:i:2:p:849-865
    DOI: 10.1007/s11135-015-0178-0
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