The impact of defence spending on the economic growth of developing countries: A cross-section study
This study analyses the defence-growth relationship for 64 developing economies using cross-section data. It analyses the impact of military expenditure on economic growth with a demand and supply side model using simultaneous equation methodologies (2SLS and 3SLS). The empirical results, bearing in mind the possible inaccuracies of the data set and given the chosen model, suggest that defence spending has a negative impact on both the rate of economic growth and the savings-income ratio. Yet it also indicates that the effect is greater for middle-income nations which may have less to gain from defence sector spill-overs. The results also indicate that strategic factors, as much as economic constraints, determine defence spending in developing countries.
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Volume (Year): 14 (2003)
Issue (Month): 1 ()
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- Paul Dunne & Eftychia Nikolaidou, 2001. "Military expenditure and economic growth: A demand and supply model for Greece, 1960-96," Defence and Peace Economics, Taylor & Francis Journals, vol. 12(1), pages 47-67.
- Biswas, Basudeb & Ram, Rati, 1986. "Military Expenditures and Economic Growth in Less Developed Countries: An Augmented Model and Further Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 34(2), pages 361-72, January.
- Lotz, Joergen R, 1970. "Patterns of Government Spending in Developing Countries," The Manchester School of Economic & Social Studies, University of Manchester, vol. 38(2), pages 119-44, June.
- Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
- James Murdoch & Chung-Ron Pi & Todd Sandler, 1997. "The impact of defense and non-defense public spending on growth in Asia and Latin America," Defence and Peace Economics, Taylor & Francis Journals, vol. 8(2), pages 205-224.
- Faini, Riccardo & Annez, Patricia & Taylor, Lance, 1984. "Defense Spending, Economic Structure, and Growth: Evidence among Countries and Over Time," Economic Development and Cultural Change, University of Chicago Press, vol. 32(3), pages 487-98, April.
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