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Defense Spending and Economic Growth: Some Empirical Evidence from the Arab Gulf Region

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  • Yousif Khalifa Al-Yousif

Abstract

The present paper investigates the causal relationship between defense spending and economic growth in six Gulf countries for the period 1975-1998. I use Granger-causality test within a multivariate error-correction framework to explore the existence and direction of causality between these two variables. The empirical results indicate that neither growth nor defense can be considered exogenous and that the relationship between them cannot be generalized across countries. Two implications can be derived from these findings. One is the need for more studies, especially from developing countries, using time-series data. The other is that decisions on defense spending should be based on each country's socio-economic circumstances. Given the small sample size, however, caution is advised in considering the above results and their implications as final.

Suggested Citation

  • Yousif Khalifa Al-Yousif, 2002. "Defense Spending and Economic Growth: Some Empirical Evidence from the Arab Gulf Region," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(3), pages 187-197.
  • Handle: RePEc:taf:defpea:v:13:y:2002:i:3:p:187-197
    DOI: 10.1080/10242690210977
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    References listed on IDEAS

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    Cited by:

    1. Lemmens, A. & Croux, C. & Dekimpe, M.G., 2004. "Decomposing Granger Causality over the Spectrum," ERIM Report Series Research in Management ERS-2004-102-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    2. 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.
    3. Bassam AbuAl-Foul, "undated". "Military Spending and Economic Growth: Evidence from Jordan," Economics Working Papers 19-04/2014, School of Business Administration, American University of Sharjah.
    4. Ming Zhong & Tsangyao Chang & Samrat Goswami & Rangan Gupta, 2014. "The Nexus between Military Expenditures and Economic Growth in the BRICS and the US: A Bootstrap Panel Causality Test," Working Papers 201449, University of Pretoria, Department of Economics.
    5. Serkan Künü & Sertaç Hopoðlu & Gürkan Bozma, 2016. "Conflict, Defense Spending and Economic Growth in the Middle East: A Panel Data Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 80-86.
    6. Jones Danquah & Daniel Sarpong & Ari Pappinen, 2013. "Causal relationships between African mahoganies exports and deforestation in Ghana: policy implications," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 15(1), pages 51-66, February.
    7. Lemmens, Aurélie & Croux, Christophe & Dekimpe, Marnik G., 2008. "Measuring and testing Granger causality over the spectrum: An application to European production expectation surveys," International Journal of Forecasting, Elsevier, vol. 24(3), pages 414-431.

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