Abstract
This paper presents an empirical evaluation of national economic growth and military expenditures. A model that includes military spending and economic growth indicators is used to analyze a panel of countries in the Southern European region and Turkey from 1988 to 2012. Data was obtained from the Stockholm International Peace Research Institute (SIPRI), the World Bank and the Heidelberg Institute for International Conflict Research (HIIK). We found that the primary variables explaining increases in military expenditures in the region are the military expenditures in the previous year, the GDP growth rate and the population growth rate. This paper also focuses on investigating whether military spending is detrimental to developing countries’ economic growth. Our results suggest an increase in military spending is detrimental to low income economies, compared to upper-middle and high income economies.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Exponential rate of growth of mid-years population from yeart – 1 to yeart, expressed as a %.
- 2.
“Gross capital formation (formerly gross domestic investment) consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories. Fixed assets include land improvements; plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings. Inventories are stocks of goods held by firms to meet temporary or unexpected fluctuations in production or sales”: World Bank (2013).
- 3.
Gross savings are calculated as gross national income less total consumption, plus net transfers (World Bank 2013).
References
Abu-Bader, S., & Abu-Qarn, A. (2003). Government expenditures, military spending and economic growth: Causality evidence from Egypt, Israel, and Syria. Journal of Policy Modeling, 25, 567–583.
Acemoglu, D. (2007). Introduction to modern economic growth. Cambridge, MA: Massachusetts Institute of Technology.
Barro, R., & Sala-i-Martin, X. (1995). Economic growth. New York: McGraw-Hill.
Benoit, E. (1973). Defense and economic growth in developing countries. Boston: Lexington Books.
Benoit, E. (1978). Growth and defense in less developed countries. Economic Development and Cultural Change, 26, 271–280.
Cameron, C., & Trivedi, P. (2005). Microeconometrics. Methods and applications. New York: Cambridge University Press.
Castillo, J., Lowell, J., Tellis, A. J., Munoz, J., & Zycher, B. (2001). Military expenditures and economic growth. Santa Monica: RAND.
Chan, S. (1987). Military expenditures and economic performance. In World military expenditures and arms transfers. Washington, DC: US Arms Control and Disarmament Agency.
Dunne, J.P. (1996). “Economic Effects of Military Expenditure in Developing Countries: A Survey,” chapter 23 in N.P. Gleditsch, ed. The Peace Dividend. Amsterdam: Elsevier
Dunne, J. P., Smith, R., & Willenbockel, D. (2005). Models of military expenditure and growth: A critical review. Defence and Peace Economics, 16, 449–461.
Dunne, J. P., & Tian, N. (2013). Military expenditure and economic growth: A survey. The Economics of Peace and Security Journal, 8(1), 5–11.
Dunne, J. P., & Uye, M. (2009). Military spending and development. In A. Tan (Ed.), The global arms trade. London: Routledge.
Hartzel, J., Agresti, A., & Caffo, B. (2001). Multinomial logit random effects models. Statistical Modeling, 1, 81–102.
Hausman, J., & McFadden, D. (1984). Specification tests for the multinomial logit model. Econometrica, 52, 1219–1240.
Heidelberg Institute for International Conflict Research. (2013). Conflict Barometer [Online]. Denmark: Heidelberg Institute for International Conflict Research (HIIK). Available: http://www.hiik.de/en/konfliktbarometer/index.html. Accessed 11 Dec 2013.
Kishi, T. (2013). Cohort effects, spousal incomes and female labour force participation in Japan: A panel data analysis. Australian Journal of Labour Economics, 16, 201–217.
Ram, R. (1995). Defense expenditure and economic growth. In K. Hartley & T. Sandler (Eds.), Handbook of defense economics (pp. 251–273). Amsterdam: Elsevier.
SIPRI. (2013). SIPRI military expenditure database [Online]. Sweden: Stockholm International Peace Research Institute. Available: http://www.sipri.org/research/armaments/milex/milex_database. Accessed 1 Nov 2013.
Verbeek, M. (2008). A guide to modern econometrics. Chichester, UK: Wiley.
World Bank. (2013). How we classify countries [Online]. The World Bank. Available: http://data.worldbank.org/about/country-classifications. Accessed 17 Nov 2013.
Zhu, C. W., Livote, E., Ross, J. S., & Penrod, J. D. (2010). A random effects multinomial logit analysis of using Medicare and VA healthcare among veterans with dementia. Home Health Care Services Quarterly, 29, 91–104.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Author Biographies
Author Biographies
Darshana Udayanganie received an M.A. degree in Economics, as well as her doctorate in Economics from the University of New Hampshire. She also holds an M.S. in Resource Economics and Policy from the University of Maine and a B.S. in Agricultural Economics from the University of Peradeniya, Sri Lanka. Her research interests are in Applied Microeconomics and Development Economics.
Evangelos N. Charos holds a B.S. degree in Mathematics, an M.A. and a Ph.D. in Economics from the University of New Hampshire. His areas of expertise are in Statistics, Econometrics, and Managerial and Applied Economics. In 1983 he began his tenure at Merrimack College and currently teaches Topics in Introductory Economics, Intermediate Microeconomics, Managerial Economics and Econometrics. Professor Charos’ research interests lie in the areas of export-led growth, human capital, and research and development. He currently serves on the Editorial Board of the “Cyprus Journal of Sciences” and is Co-Editor to “Koinon: Social Sciences Interdisciplinary Studies,” a book series whose contributors’ research resides primarily in the fields of labor and industrial sociology, organizational theory and economic and social integration in Europe.
Professor Charos’ research interests lie in the areas of export-led growth, human capital, and research and development. He has given many presentations at professional conferences and has written numerous articles, some appearing in journals such as the: International Advances in Economic Research, Journal of Economic Studies, Atlantic Economic Society, Journal of Economic Literature and Weltwirtschaftliches Archiv.
Rights and permissions
Copyright information
© 2015 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Udayanganie, D., Charos, E.N. (2015). Economic Consequences of Military Expenditure: Evidence from Southern Europe and Turkey. In: Katsikides, S., Koktsidis, P. (eds) Societies in Transition. Springer, Cham. https://doi.org/10.1007/978-3-319-13814-5_11
Download citation
DOI: https://doi.org/10.1007/978-3-319-13814-5_11
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-13813-8
Online ISBN: 978-3-319-13814-5
eBook Packages: Humanities, Social Sciences and LawPolitical Science and International Studies (R0)