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Military spending and economic growth: a panel data investigation

Author

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  • E. Desli

    (Aristotle University of Thessaloniki)

  • A. Gkoulgkoutsika

    (Aristotle University of Thessaloniki)

Abstract

The present study examines the worldwide effect of military spending on economic growth for the period 1960–2017 utilizing the dynamic common correlated effects estimator that accounts for country heterogeneity and cross-sectional dependence, while it provides not only sample-average coefficients but country-specific coefficients as well. Overall, the worldwide effect of military spending on economic growth over the period 1960–2017 appears to be negative, and this originates from the cold war and early post-cold war era and is especially evident for the North Atlantic Treaty Organization countries. For the post-cold war era, a neutral effect (i.e., no statistical significance) is apparent for the majority of countries. At the country-specific level, there are some economies that consistently benefit or suffer from military spending, while the type of the individual impact for most of the countries varies over different time periods, with no clear pattern.

Suggested Citation

  • E. Desli & A. Gkoulgkoutsika, 2021. "Military spending and economic growth: a panel data investigation," Economic Change and Restructuring, Springer, vol. 54(3), pages 781-806, August.
    • Handle: RePEc:kap:ecopln:v:54:y:2021:i:3:d:10.1007_s10644-020-09267-8
    DOI: 10.1007/s10644-020-09267-8
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    References listed on IDEAS

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    1. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    2. Katarina Keller & Panu Poutvaara & Andreas Wagener, 2009. "Military Draft And Economic Growth In Oecd Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(5), pages 373-393, October.
    3. Paul Dunne & Eftychia Nikolaidou & Dimitrios Vougas, 2001. "Defence spending and economic growth: A causal analysis for Greece and Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 12(1), pages 5-26.
    4. Anindya Banerjee & Massimiliano Marcellino & Chiara Osbat, 2005. "Testing for PPP: Should we use panel methods?," Empirical Economics, Springer, vol. 30(1), pages 77-91, January.
    5. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
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    Cited by:

    1. Rafał Woźniak & Jacek Lewkowicz, 2023. "Can We Have More Butter and Guns Simultaneously? An Endogeneity Perspective," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 28-46.
    2. Charles Shaaba Saba & Nicholas Ngepah, 2022. "Nexus between telecommunication infrastructures, defence and economic growth: a global evidence," Netnomics, Springer, vol. 22(2), pages 139-177, October.
    3. Christos Kollias & Panayiotis Tzeremes, 2022. "Militarization, investment, and economic growth 1995–2019," Economics of Peace and Security Journal, EPS Publishing, vol. 17(1), pages 17-29, April.

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    More about this item

    Keywords

    Military expenditures; Economic growth; Dynamic common correlated effects estimator; Panel data;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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