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Defense spending and economic growth: evidence from China, 1952–2012

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  • Mie Augier
  • Robert McNab
  • Jerry Guo
  • Phillip Karber

Abstract

This paper examines whether defense expenditures contributed to economic growth in China for the 1952–2012 period. We examine the contribution of defense to economic growth using recently published official data on economic activity, defense, and government expenditures. We employ the Feder-Ram and augmented Solow models of economic growth to explore the defense-growth relationship. The Feder-Ram model appears to poorly explain economic growth in China. The augmented Solow model suggests, however, that a 1% increase in defense expenditures raises the economic growth rate by approximately 0.15–0.19%.

Suggested Citation

  • Mie Augier & Robert McNab & Jerry Guo & Phillip Karber, 2017. "Defense spending and economic growth: evidence from China, 1952–2012," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(1), pages 65-90, January.
    • Handle: RePEc:taf:defpea:v:28:y:2017:i:1:p:65-90
    DOI: 10.1080/10242694.2015.1099204
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    References listed on IDEAS

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    1. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
    2. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, January.
    3. Ram, Rati, 1995. "Defense expenditure and economic growth," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 10, pages 251-274, Elsevier.
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    Cited by:

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    2. Kyriakos Emmanouilidis & Christos Karpetis, 2020. "The Defense–Growth Nexus: A Review of Time Series Methods and Empirical Results," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(1), pages 86-104, January.
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    4. Chiwei Su & Yingying Xu & Hsu Ling Chang & Oana-Ramona Lobont & Zhixin Liu, 2020. "Dynamic Causalities between Defense Expenditure and Economic Growth in China: Evidence from Rolling Granger Causality Test," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(5), pages 565-582, July.
    5. Saba, Charles Shaaba, 2023. "Nexus between CO2 emissions, renewable energy consumption, militarisation, and economic growth in South Africa: Evidence from using novel dynamic ARDL simulations," Renewable Energy, Elsevier, vol. 205(C), pages 349-365.
    6. Jun Ando, 2018. "Externality of Defense Expenditure in the United States: A New Analytical Technique to Overcome Multicollinearity," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(7), pages 794-808, November.
    7. Shafa Guliyeva, 2024. "Analyzing the Interplay between Energy Consumption and Military Expenditure: A Comparative Study of Azerbaijan, Turkey, and Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 533-543, January.
    8. Aamer S. Abu-Qarn, 2019. "Reassessment of the Proximate Determinants of Income Levels and Growth of Nations," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(4), pages 463-483, December.
    9. Yingying Xu & Hsu Ling Chang & Chi Wei Su & Adelina Dumitrescu, 2018. "Guns for Butter? Empirical Evidence from China," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(7), pages 809-820, November.
    10. Dada James Temitope & Awoleye Emmanuel Olayemi & Arnaut Marina & Al-Faryan Mamdouh Abdulaziz Saleh, 2023. "Revisiting the Military Expenditure-Growth Nexus: Does Institutional Quality Moderate the Effect?," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 29(1), pages 19-42, February.

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