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Do Military Expenditures Crowd-out Health Expenditures? Evidence from around the World, 2000–2013

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  • HongLi Fan
  • Wei Liu
  • Peter C. Coyte

Abstract

The paper examines the relationship between health and military expenditures using pooled cross-sectional (197 countries) and time series (2000–2013) data. Simultaneous equation models were employed to estimate the relationship between an array of public sector expenditures in order to address potential endogeneity. Our empirical findings strongly support the crowding-out hypothesis whereby increased military expenditures reduce the capacity of government to direct expenditures to health expenditures. These findings were robust to alternative specifications explored in the sensitivity analyses. Compared with upper-middle-income countries, the crowding-out effect became more pronounced among lower-middle-income countries. Consequently, this study shows that increased military expenditures negatively impacts health expenditures, and therefore poses as an important risk factor for population health and individual well-being. Moreover, it is the poorest of nations that are most sensitive to the negative effects of increased military expenditures.

Suggested Citation

  • HongLi Fan & Wei Liu & Peter C. Coyte, 2018. "Do Military Expenditures Crowd-out Health Expenditures? Evidence from around the World, 2000–2013," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(7), pages 766-779, November.
    • Handle: RePEc:taf:defpea:v:29:y:2018:i:7:p:766-779
    DOI: 10.1080/10242694.2017.1303303
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    Cited by:

    1. Pierre-Louis Vézina, 2021. "The Oil Nouveau-Riche and Arms Imports," Journal of African Economies, Centre for the Study of African Economies, vol. 30(4), pages 349-369.
    2. Masako Ikegami & Zijian Wang, 2023. "Does military expenditure crowd out health-care spending? Cross-country empirics," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(2), pages 1657-1672, April.
    3. Sapkota, Jeet Bahadur, 2020. "Integrating South Asia into Asia: Evidence from Trade Statistics," MPRA Paper 106097, University Library of Munich, Germany.
    4. Sudeshna Ghosh, 2022. "Analysing the nexus between income inequality and military expenditure in top ten defence expenditure economies," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(2), pages 689-712, April.
    5. Auer, Daniel & Meierrieks, Daniel, 2021. "Merchants of death: Arms imports and terrorism," European Economic Review, Elsevier, vol. 137(C).
    6. Adem Elveren & Valentine M. Moghadam, 2019. "The impact of militarization on gender inequality and female labor force participation," Working Papers 1307, Economic Research Forum, revised 21 Aug 2019.
    7. Paula Gómez-Trueba Santamaría & Alfredo Arahuetes García & Tomás Curto González, 2021. "A tale of five stories: Defence spending and economic growth in NATO´s countries," PLOS ONE, Public Library of Science, vol. 16(1), pages 1-22, January.

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