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The Demand for Military Spending in Egypt

Listed author(s):
  • Yasmine M. Abdelfattah
  • Aamer S. Abu-Qarn
  • J. Paul Dunne
  • Shadwa Zaher

Egypt plays a pivotal role in the security of the Middle East as the doorway to Europe and its military expenditure reflects its involvement in the machinations of such an unstable region, showing considerable variation over the last 40 years. These characteristics make it a particularly interesting case study of the determinants of military spending. This paper specifies and estimates an econometric model of the Egyptian demand for military spending, taking into account important strategic and political factors. Both economic and strategic factors are found to play a role in determining military burden/spending, with clear positive effects of lagged military burden, suggesting some sort of institutional inertia, plus negative output and net exports effects. The strategic effect as a result of the impact of Israel's military burden is mostly positive and significant, though its impact is reduced when the impact of important strategic events are taken into account. The military spending of Egypt's allies Jordan and Syria generally seems to have had no effect on Egypt's spending. These results are consistent over a range of econometric techniques.

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File URL: http://hdl.handle.net/10.1080/10242694.2013.763454
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Article provided by Taylor & Francis Journals in its journal Defence and Peace Economics.

Volume (Year): 25 (2014)
Issue (Month): 3 (June)
Pages: 231-245

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Handle: RePEc:taf:defpea:v:25:y:2014:i:3:p:231-245
DOI: 10.1080/10242694.2013.763454
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  1. Aamer S. Abu-Qarn & J Paul Dunne & Yasmine M. Abdelfattah & Shadwa Zaher, 2010. "The Demand for Military Spending in Egypt," Working Papers 1001, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  2. Christos Kollias & Suzanna-Maria Paleologou, 2003. "Domestic political and external security determinants of the demand for greek military expenditure," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(6), pages 437-445.
  3. Paul Dunne & Sam Perlo-Freeman, 2003. "The Demand for Military Spending in Developing Countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 23-48.
  4. Abu-Qarn, Aamer S. & Abu-Bader, Suleiman, 2009. "On the dynamics of the Israeli-Arab arms race," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(3), pages 931-943, August.
  5. Maizels, Alfred & Nissanke, Machiko K., 1986. "The determinants of military expenditures in developing countries," World Development, Elsevier, vol. 14(9), pages 1125-1140, September.
  6. Eftychia Nikolaidou, 2008. "The Demand For Military Expenditure: Evidence From The Eu15 (1961-2005)," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(4), pages 273-292.
  7. Smith, R P, 1989. "Models of Military Expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(4), pages 345-359, Oct.-Dec..
  8. Smith, R P, 1980. "The Demand for Military Expenditure," Economic Journal, Royal Economic Society, vol. 90(363), pages 811-820, December.
  9. J. Paul Dunne & Sam Perlo-Freeman, 2003. "The demand for military spending in developing countries: A dynamic panel analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(6), pages 461-474.
  10. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
  11. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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