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The military Expenditure and Economic Growth in the case of the South Korea : The dynamic Computational Equilibrium model in an Endogeneous Growth Perspective

Listed author(s):
  • Hee-Won Yang
  • Chan-Young Hong
  • Seong-Mun Jeong
  • Jeong-Dong Lee

This paper analyses the effect of military expenditure on economic growth. With various channels through which military expenditure may influence economic growth, much of the defense economics literature has found inconsistent results. This study is based on the national defense expense for the South Korea, the base year of 2009 is chosen. The effects of the military expenditure are examined in the endogeneous growth perspective. We also employ the dynamic Computational General Equilibrium in order to measure the aggregate effect, considering the channels of the positive or negative effect and the reaction of individual industries and economic agents which it follow in change of military expenditure. The positive or negative effects of military expenditure on industry varies over sectors. GDP growth is affected by military spending. We examine the change of GDP growth in case of increase(or decrease) of military spending. But welfare level including nation’s security Index may improve or be decreased.

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Paper provided by EcoMod in its series EcoMod2012 with number 4264.

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Date of creation: 01 Jul 2012
Handle: RePEc:ekd:002672:4264
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  1. Uk Heo, 1999. "Defense Spending and Economic Growth in South Korea: The Indirect Link," Journal of Peace Research, Peace Research Institute Oslo, vol. 36(6), pages 699-708, November.
  2. Joshua Aizenman & Reuven Glick, 2006. "Military expenditure, threats, and growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(2), pages 129-155.
  3. Deger, Saadet, 1986. "Economic Development and Defense Expenditure," Economic Development and Cultural Change, University of Chicago Press, vol. 35(1), pages 179-196, October.
  4. Romer, Paul M., 1990. "Human capital and growth: Theory and evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 32(1), pages 251-286, January.
  5. Mello, Marcelo, 2008. "Skilled labor, unskilled labor, and economic growth," Economics Letters, Elsevier, vol. 100(3), pages 428-431, September.
  6. Durmus Ozdemir & Ali Bayar, 2009. "The Peace Dividend Effect Of Turkish Convergence To The Eu: A Multi-Region Dynamic Cge Model Analysis For Greece And Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(1), pages 69-78.
  7. Thompson, Earl A, 1974. "Taxation and National Defense," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 755-782, July/Aug..
  8. 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.
  9. Emmanuel Athanassiou & Christos Kollias & Stavros Zografakis, 2002. "The Effects of Defence Spending Reductions: A CGE Estimation of the Foregone Peace Dividend in the Case of Greece," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(2), pages 109-119.
  10. Pavel Yakovlev, 2007. "Arms Trade, Military Spending, And Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(4), pages 317-338.
  11. Berthelemy, Jean-Claude & Herrera, Remy & Sen, Somnath, 1995. "Military Expenditure and Economic Development: An Endogenous Growth Perspective," Economic Change and Restructuring, Springer, vol. 28(2-3), pages 205-233.
  12. Collins, Susan M, 1990. "Lessons from Korean Economic Growth," American Economic Review, American Economic Association, vol. 80(2), pages 104-107, May.
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