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Does military spending stimulate growth? An empirical investigation in Italy

Author

Listed:
  • Pierluigi Daddi
  • Giorgio d’Agostino
  • Luca Pieroni

Abstract

This paper investigates the effect of military burden on economic growth and extends previous works on the optimal size of government expenditure by exploring how external threat affects the preferences of the households and, in turn, economic growth. Post World War II Italian data are used to estimate nonlinear growth models using time-series semi-parametric methods. The estimates show that total government and civilian burdens are productive, whereas, military burden has significant effects on economic growth through the expenditure for peacekeeping missions, which reduces the insecurity in the home country. This may justify economically the current not negligible budget devoted to peacekeeping and humanitarian missions.

Suggested Citation

  • Pierluigi Daddi & Giorgio d’Agostino & Luca Pieroni, 2018. "Does military spending stimulate growth? An empirical investigation in Italy," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(4), pages 440-458, June.
    • Handle: RePEc:taf:defpea:v:29:y:2018:i:4:p:440-458
    DOI: 10.1080/10242694.2016.1158438
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    Cited by:

    1. Banerjee, Anindya & Karavias, Yiannis & Wang, Lijun, 2023. "The impact of military spending on economic growth: A threshold regression analysis," MPRA Paper 124684, University Library of Munich, Germany, revised 09 Sep 2024.
    2. Oukhallou, Youssef, 2019. "Military Expenditure and Economic Development," MPRA Paper 98352, University Library of Munich, Germany.
    3. Luqman, Muhammad & Antonakakis, Nikolaos, 2021. "Guns better than butter in Pakistan? The dilemma of military expenditure, human development, and economic growth," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    4. Alessandra Cepparulo & Paolo Pasimeni, 2024. "Defence Spending in the European Union," European Economy - Discussion Papers 199, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Shakoor Ahmed & Khorshed Alam & Afzalur Rashid & Jeff Gow, 2020. "Militarisation, Energy Consumption, CO2 Emissions and Economic Growth in Myanmar," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(6), pages 615-641, August.
    6. Brau, Rinaldo & Statzu, Vania, 2017. "The economic enhancement of military sites and landscapes: what are the lessons of international practice?," MPRA Paper 98570, University Library of Munich, Germany.
    7. repec:agr:journl:v:1(618):y:2019:i:1(618):p:169-182 is not listed on IDEAS
    8. Jamil, Faisal & Sabir, Mayira, 2025. "Military expenditures and macroeconomic indicators in selected countries of Asia and Africa," World Development Perspectives, Elsevier, vol. 39(C).
    9. Shafa Guliyeva, 2024. "Analyzing the Interplay between Energy Consumption and Military Expenditure: A Comparative Study of Azerbaijan, Turkey, and Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 533-543, January.
    10. Ran Tao & Oana Ramona Glonț & Zheng-Zheng Li & Oana Ramona Lobonț & Adina Alexandra Guzun, 2020. "New Evidence for Romania Regarding Dynamic Causality between Military Expenditure and Sustainable Economic Growth," Sustainability, MDPI, vol. 12(12), pages 1-13, June.
    11. Khalid Zaman, 2019. "Correction to: Does higher military spending affect business regulatory and growth specific measures? Evidence from the group of seven (G–7) countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 349-349, April.
    12. Qurat Ul AIN & Syed Imran RAIS & Syed Tahir Hussain SHAH & Khalid ZAMAN & Shakira EJAZ & Abdul MANSOOR, 2019. "Empirically testing Keynesian defense burden hypothesis, nonlinear hypothesis, and spillover hypothesis: Evidence from Asian countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(618), S), pages 169-182, Spring.
    13. Dimitrios Dimitriou & Eleftherios Goulas & Christos Kallandranis & Konstantinos Drakos, 2025. "Military Expenditures and Economic Growth: Evidence from NATO and Non-NATO Alliances," Defence and Peace Economics, Taylor & Francis Journals, vol. 36(3), pages 324-348, April.
    14. Paula Gómez-Trueba Santamaría & Alfredo Arahuetes García & Tomás Curto González, 2021. "A tale of five stories: Defence spending and economic growth in NATO´s countries," PLOS ONE, Public Library of Science, vol. 16(1), pages 1-22, January.

    More about this item

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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