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Military Spending, Corruption, Persistence and Long Run Growth

Author

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  • Giorgio d’Agostino
  • J. Paul Dunne
  • Marco Lorusso
  • Luca Pieroni

Abstract

This paper contributes to the analysis of the impact of military spending and corruption on economic growth, by considering not only the political dimension of corruption, distorting the allocation of resources to sectors, but also the impact on the efficiency of the bureaucratic environment. It does this by developing the model of Mauro (2004) in the context of an endogenous growth model to deal with corruption in the defence sector. It then uses data from the International Country Risk Guide to produce a novel measure of corruption that combines corruption within the political system, institutional strength, quality of bureaucracy and the degree of military participation in the country and estimates the model for a large panel of countries. The results suggest that both military spending (as a share of total government spending) and corruption have significant negative long run effects on output. As the model also suggests that multiple equilibria can exist, a comparison is made between high and low corruption groups of countries and clear differences are indeed found. This suggests that effort is needed to encourage and coerce high corruption and military spending countries, but low corruption and military spending countries are likely to need little attention.

Suggested Citation

  • Giorgio d’Agostino & J. Paul Dunne & Marco Lorusso & Luca Pieroni, 2020. "Military Spending, Corruption, Persistence and Long Run Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(4), pages 423-433, June.
    • Handle: RePEc:taf:defpea:v:31:y:2020:i:4:p:423-433
    DOI: 10.1080/10242694.2020.1751503
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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. Kyriakos Emmanouilidis & Christos Karpetis, 2022. "Cross–Country Dependence, Heterogeneity and the Growth Effects of Military Spending," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(7), pages 842-856, October.
    3. José Solana‐Ibáñez & Manuel Caravaca‐Garratón, 2021. "Stakeholder engagement and corporate social reputation: The influence of exogenous factors on efficiency performance (stakeholder engagement and exogenous factors): Stakeholder engagement and exogenou," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1891-1905, November.
    4. Kyriakos Emmanouilidis, 2024. "Military Spending and Economic Output: A Decomposition Analysis of the US Military Budget," Defence and Peace Economics, Taylor & Francis Journals, vol. 35(2), pages 243-263, February.
    5. Faqeer Muhammad & Anwar Khan & Jamal Hussain & Tasawar Baig & Saadia Baig, 2024. "Influence of Military Expenditures, Industrial Growth, and Financial Development on Economic Growth, and Environment in Heterogeneous Political Regimes in Pakistan," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 2439-2459, March.
    6. Adem Yavuz Elveren & Ünal Töngür & Tristian Myers, 2023. "Military spending and economic growth: A post-Keynesian model," Economics of Peace and Security Journal, EPS Publishing, vol. 18(2), pages 51-65, October.
    7. Shreesh Chary, 2023. "The nexus between arms imports, military expenditures and economic growth of the top arms importers in the world: a pooled mean group approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 51(4), pages 808-822, August.
    8. Ceyhun Elgin & Adem Y. Elveren & Gökçer Özgür & Gül Dertli, 2022. "Military spending and sustainable development," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1466-1490, August.
    9. Thanh Dinh Su & Canh Phuc Nguyen, 2022. "Productive Contribution of Public Spending and Human Capital in Developing Countries Revisited: The Role of Trade Openness," Foreign Trade Review, , vol. 57(1), pages 66-84, February.
    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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