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Long-Run Relationships and Causality Tests Between Military Expenditure and Economic Growth in India

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  • Masoud Ali Khalid
  • Alhaji Bukar Mustapha

Abstract

Economists recognize that the public expenditure has an impact on economic growth. The rising level of military spending over other classes of public expenditure like economic and social services has raised a serious concern among scholars and have been at the core of recent development literature and thinking. In this study, we focus on to reexamine the effects of military spending on economic growth in India using annual data from the period of 1980 to 2011. The analysis is carried out within a multivariate setting that includes real GDP, real government military expenditure, population and real export.. In this paper, the autoregressive distributive lags (ARDL) cointegration approach is used to reexamine the long-run relationships among the variables. We then employ the Granger causality test to identify the direction of causality. The results for ARDL tests indicate that there is a significant relationship between military expenditure and economic growth in the short run, while the long run results suggest otherwise. While the estimated granger causality outcomes, revealed a unidirectional relationship between GDP and military spending.

Suggested Citation

  • Masoud Ali Khalid & Alhaji Bukar Mustapha, 2014. "Long-Run Relationships and Causality Tests Between Military Expenditure and Economic Growth in India," The Economics and Finance Letters, Conscientia Beam, vol. 1(4), pages 49-58.
    • Handle: RePEc:pkp:teafle:v:1:y:2014:i:4:p:49-58:id:1587
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    Cited by:

    1. Hafsa Shoukat, 2022. "Economic Growth Effects of Military Expenditure in the Absence and Presence of Armed Conflicts: The Case of Pakistan and India," Economics Discussion Papers em-dp2022-13, Department of Economics, University of Reading.
    2. Abdulnasser Hatemi-J & Tsangyao Chang & Wen-Yi Chen & Feng-Li Lin & Rangan Gupta, 2015. "Asymmetric Granger Causality between Military Expenditures and Economic Growth in Top Six Defense Suppliers," Working Papers 201565, University of Pretoria, Department of Economics.
    3. Gitana Dudzevičiūtė & Vida Česnuitytė & Dalia Prakapienė, 2021. "Defence Expenditure–Government Debt Nexus in the Context of Sustainability in Selected Small European Union Countries," Sustainability, MDPI, vol. 13(12), pages 1-18, June.
    4. Muhammad Azam & Faisal Khan & Khalid Zaman & Amran Md. Rasli, 2016. "Military Expenditures and Unemployment Nexus for Selected South Asian Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 1103-1117, July.
    5. Tariq Hussain & Ahmad Raza Ul Mustafa & Makhdum M.I. & Kaleem Ullah, 2022. "Defense Expenditures, Fiscal Deficit And Debt Servicing Nexus: A Case Study Of Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(2), pages 74-83, June.
    6. Abdulnasser Hatemi-J & Tsangyao Chang & Wen-Yi Chen & Feng-Li Lin & Rangan Gupta, 2018. "Asymmetric causality between military expenditures and economic growth in top six defense spenders," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(3), pages 1193-1207, May.
    7. Aamir Aijaz Syed, 2021. "The Asymmetric Relationship Between Military Expenditure, Economic Growth and Industrial Productivity: An Empirical Analysis of India, China and Pakistan Via the NARDL Approach," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 13(1), pages 77-97, March.

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