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The impact of defense and non-defense public spending on growth in Asia and Latin America

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Listed:
  • James Murdoch
  • Chung-Ron Pi
  • Todd Sandler

Abstract

For a three-sector Feder-Ram framework, we present time-series, cross-sectional estimates for two cohorts, consisting of Asian and Latin American countries. The estimates indicate that private investment, and defense and non-defense public spending are growth promoting for alternative error components representations. For the best error components representation, greater growth enhancement is associated with the two forms of public spending in Asia than in Latin America, while the opposite comparison characterizes private investment. Although defense is growth promoting, an opportunity cost exists insofar as non-defense spending, financed by defense spending, appears to give a small net boost to growth in Latin America.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:defpea:v:8:y:1997:i:2:p:205-224
    DOI: 10.1080/10430719708404876
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    Citations

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    Cited by:

    1. Tiwari, Aviral & Shahbaz, Muhammad, 2011. "Does Defence Spending Stimulate Economic Growth in India?," MPRA Paper 30880, University Library of Munich, Germany, revised 18 Apr 2011.
    2. Shieh, Jhy-yuan & Lai, Ching-chong & Chang, Wen-ya, 2002. "The impact of military burden on long-run growth and welfare," Journal of Development Economics, Elsevier, vol. 68(2), pages 443-454, August.
    3. Christos Kollias & Suzanna-Maria Paleologou, 2010. "Growth, investment and military expenditure in the European Union-15," Journal of Economic Studies, Emerald Group Publishing, vol. 37(2), pages 228-240, May.
    4. Hannah Galvin, 2003. "The impact of defence spending on the economic growth of developing countries: A cross-section study," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(1), pages 51-59.
    5. Thierry Laurent, 2012. "Dépenses militaires, croissance et bien être : une simulation de l’impact macroéconomique de la R&D défense," Revue d'économie politique, Dalloz, vol. 122(6), pages 971-1009.
    6. Ching-chong Lai & Jhy-yuan Shieh & Wen-Ya Chang, 2002. "Endogenous Growth and Defense Expenditures: A New Explanation of the Benoit Hypothesis," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(3), pages 179-186.
    7. Carlos Pestana Barros & Todd Sandler, 2003. "Internal and external threats: Defence economic analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(6), pages 385-388.
    8. Angus C. Chu & Ching-Chong Lai, 2012. "On the Growth and Welfare Effects of Defense R&D," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(3), pages 473-492, June.
    9. Eduardo Morales Ramos, 2004. "Country survey XIX: Mexico," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(1), pages 83-99, February.
    10. Angus C. Chu & Ching-Chong Lai, 2012. "On the Growth and Welfare Effects of Defense R&D," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(3), pages 473-492, June.
    11. Wijeweera Albert & Webb Matthew J., 2010. "A Peace Dividend for Sri Lanka: The Case for a Return to Prosperity Following the End of Hostilities," Global Economy Journal, De Gruyter, vol. 10(2), pages 1-11, May.
    12. Kalyoncu, Huseyin & Yucel, Fatih, 2005. "An analytical approach on defense expenditure and economic growth: the case of Turkey and Greece," MPRA Paper 4262, University Library of Munich, Germany, revised 2006.
    13. Lin Hung-Pin & Tsung-Li Wang & Cheng-Lang Yang, 2016. "Further Causality Evidence on Arms Race, Inflation and Economic Growth," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 50(2), pages 123-136.
    14. 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.
    15. Thomas Bernauer & Vally Koubi & Fabio Ernst, 2009. "National and Regional Economic Consequences of Swiss Defense Spending," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(4), pages 467-484, July.
    16. Christos Kollias & Suzanna-Maria Paleologou, 2016. "Investment, growth, and defense expenditure in the EU15: Revisiting the nexus using SIPRI’s new consistent dataset," Economics of Peace and Security Journal, EPS Publishing, vol. 11(2), pages 28-37, October.
    17. Christos Kollias & Suzanna-Maria Paleologou & Panayiotis Tzeremes & Nickolaos Tzeremes, 2017. "Defence expenditure and economic growth in Latin American countries: evidence from linear and nonlinear causality tests," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-25, December.
    18. Eduardo Morales-Ramos, 2002. "Defence R&D expenditure: The crowding-out hypothesis," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(5), pages 365-383.

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