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Military Expenditures And Inequality In The Middle East And North Africa: A Panel Analysis

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  • Hamid E. Ali

Abstract

Middle Eastern and North African (MENA) countries have been characterized by the preponderant role of their military forces in economic matters, as demonstrated by the high levels of military spending and the growing industrial complex. While extensive research examines the relationship between military expenditure and economic growth, little attention has been paid to the effect of military expenditure on economic inequality. Studying inequality in MENA countries provides an opportunity to assess factors that shape the countries’ level of economic well-being, which has greater public policy implications in terms of how society allocates its scarce resources among competing needs. This paper examines two important issues. In the first part of the paper, we examine the relationship between military spending and inequality in MENA countries using a panel regression for country-level observations over the period 1987--2005. The empirical results indicate that military spending has a strong and negative effect on inequality. Contrary to the conventional wisdom, in MENA countries a systematic increase in military spending could reduce the level of inequality. In the second part of this paper, we examine the demand for military expenditure; we find that factors such as inequality level and per capita income negatively affect military expenditure.

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  • Hamid E. Ali, 2012. "Military Expenditures And Inequality In The Middle East And North Africa: A Panel Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(6), pages 575-589, December.
  • Handle: RePEc:taf:defpea:v:23:y:2012:i:6:p:575-589 DOI: 10.1080/10242694.2012.663578
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    References listed on IDEAS

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    1. J. Paul Dunne & Ron Smith & Dirk Willenbockel, 2005. "Models Of Military Expenditure And Growth: A Critical Review," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 449-461.
    2. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
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    Cited by:

    1. Muhammad Shahbaz & Reza Sherafatian-Jahromi & Muhammad Nasir Malik & Muhammad Shahbaz Shabbir & Farooq Ahmed Jam, 2016. "Linkages between defense spending and income inequality in Iran," Quality & Quantity: International Journal of Methodology, Springer, pages 1317-1332.
    2. Töngür, Ünal & Hsu, Sara & Elveren, Adem Yavuz, 2015. "Military expenditures and political regimes: Evidence from global data, 1963–2000," Economic Modelling, Elsevier, vol. 44(C), pages 68-79.
    3. Muhammad Shahbaz & Reza Sherafatian-Jahromi & Muhammad Nasir Malik & Muhammad Shahbaz Shabbir & Farooq Ahmed Jam, 2016. "Linkages between defense spending and income inequality in Iran," Quality & Quantity: International Journal of Methodology, Springer, pages 1317-1332.
    4. Unal Tongur & Sara Hsu & Adem Yavuz Elveren, 2013. "Military Expenditures and Political Regimes: An Analysis Using Global Data, 1963-2001," ERC Working Papers 1307, ERC - Economic Research Center, Middle East Technical University, revised Jul 2013.

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