Military spending and developmental outcomes of the social contract in the Middle East

This study examines the impact of military spending on developmental outcomes associated with the social contract in Middle Eastern countries over the period 1995-2023. The Human Development Index (HDI) is used as an indicator of developmental outcomes associated with the social contract. It also serves as a proxy for the state's ability to transform public economic resources into developmental gains in health, education, and standards of living. The study relies on panel data covering 17 countries and employs an econometric framework that combines static models with a dynamic System GMM model to address temporal persistence, endogeneity, and unobserved heterogeneity. The results indicate a negative and statistically significant effect of military spending on the Human Development Index, an effect that persists after controlling for key macroeconomic factors and after incorporating the dynamic dimension. The findings also reveal a high degree of persistence in HDI, reflecting its cumulative nature over time. Regarding the institutional context, the results do not provide strong evidence of an effective moderating role for the Polity index, as its impact appears limited and statistically weak. Overall, the findings suggest that military spending constitutes a persistent distributive pressure that affects developmental outcomes associated with the social contract within the limits allowed by the data and the adopted methodology.