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Defense Expenditures, Economic Growth, and The “Peace Dividendâ€

Author

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  • Alex Mintz

    (Texas A&M University)

  • Randolph T. Stevenson

    (University of Rochester)

Abstract

Despite the proliferation of studies on the impact of military spending on economic growth, it is still not known whether defense spending hinders or promotes growth. Most analysts attribute the lack of consistent/robust findings to three problems: the lack of a sound theory of defense-growth trade-offs, an inadequate research design, and a failure to account for the externality effects that defense spending might have on other parts of the economy. In this study, the authors try to remedy these problems by (1) relying on a model of the defense-growth trade-off that is grounded in the neoclassic theory of growth, (2) estimating this model using time-series data on 103 countries, and (3) explicitly accounting for the externality effects of defense spending by the use of a multisectorial model. The results show that, regardless of the specification of the models, and contrary to most cross-national studies, military expenditures have a significant positive effect on growth in only about 10% of the cases.

Suggested Citation

  • Alex Mintz & Randolph T. Stevenson, 1995. "Defense Expenditures, Economic Growth, and The “Peace Dividendâ€," Journal of Conflict Resolution, Peace Science Society (International), vol. 39(2), pages 283-305, June.
    • Handle: RePEc:sae:jocore:v:39:y:1995:i:2:p:283-305
    DOI: 10.1177/0022002795039002004
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    References listed on IDEAS

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    Cited by:

    1. Oana Ramona GLONT, 2018. "The Effect Of Defence Spending On Economic Development In Central Europe," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 16, pages 97-106, May.
    2. Julien Malizard, 2013. "Opportunity Cost Of Defense: An Evaluation In The Case Of France," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 247-259, June.
    3. Abroskin A.S. (Аброскин, А.С.) & Abroskina N.A. (Аброскина, Н.А.), 2016. "Methods of Analysis of Shadow of Cross-Border Capital Flows [Методы Анализа Теневых Трансграничных Потоков Капитала]," Working Papers 2134, Russian Presidential Academy of National Economy and Public Administration.
    4. Sefa Awaworyi Churchill & Siew Ling Yew, 2018. "The effect of military expenditure on growth: an empirical synthesis," Empirical Economics, Springer, vol. 55(3), pages 1357-1387, November.
    5. Abroskin A.S. (Аброскин, А.С.) & Abroskina N.A. (Аброскина, Н.А.), 2016. "Shadow Cross-Border Capital Flows: Contemporary Concepts, Principles and Information Base of Accounting and Measurement [Теневые Трансграничные Потоки Капитала: Современные Концепции, Принципы И Ин," Working Papers 2135, Russian Presidential Academy of National Economy and Public Administration.
    6. E. Desli & A. Gkoulgkoutsika & C. Katrakilidis, 2017. "Investigating the Dynamic Interaction between Military Spending and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 511-526, August.

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