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The Vicious Cycle of the Foreign Military Debt

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  • Stavrinos, Vasilios G.
  • Zombanakis, George A.

Abstract

This paper aims at estimating first the effects of defense spending on the main determinants of growth, and second the extent to and the channels through which the military debt of Greece influences the overall debt burden of the country, and consequently the critical determinants of economic growth and development. Increased imports of sophisticated weapons and military equipment can be financed at the cost of investment (guns v. ploughshares), or/and at the cost of human capital formation (guns v. butter and chalk), or at the cost of increasing the foreign debt of the country. It is this last case which is investigated in this paper. Our empirical results indicate that whatever the necessity and the benefits of the security aspect of defense, its economic costs are quite substantial. The military as a claimant of resources has a negative and non trivial effect on physical capital accumulation, and human capital formation. Moreover, financing increased military imports through borrowing from abroad has a negative and significant effect on the determinants of growth and development.

Suggested Citation

  • Stavrinos, Vasilios G. & Zombanakis, George A., 1998. "The Vicious Cycle of the Foreign Military Debt," MPRA Paper 17758, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:17758
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    References listed on IDEAS

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    1. Chan, Steve, 1988. "Defense Burden and Economic Growth: Unraveling the Taiwanese Enigma," American Political Science Review, Cambridge University Press, vol. 82(3), pages 913-920, September.
    2. Rémy Herrera, 2007. "Developing Countries' External Debt," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00275026, HAL.
    3. Gleditsch & Fetter Nils & Cappelen Âdne & Bjerkholt Olav & Maneval Helmut, 1995. "The Wages of Peace," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 214(6), pages 757-758, December.
    4. Ã…dne Cappelen & Nils Petter Gleditsch & Olav Bjerkholt, 1984. "Military Spending and Economic Growth in the OECD Countries," Journal of Peace Research, Peace Research Institute Oslo, vol. 21(4), pages 361-373, December.
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    Citations

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    Cited by:

    1. Andreou Andreas S. & Zombanakis George A. & Migiakis Petros M., 2013. "On Defence Expenditure Reduction: Balancing Between Austerity and Security in Greece," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(3), pages 437-458, December.
    2. ANDREOU, ANDREAS & PARSOPOULOS, KONSTANTINE & VRACHATIS, MICHAEL & Zombanakis, George A., 2003. "Optimal Versus Required Defence Spending," MPRA Paper 78663, University Library of Munich, Germany, revised 14 Jul 2003.
    3. ANDREOU, A. S. & PARSOPOULOS, K. E. & VRACHATIS, M. N. & Zombanakis, George A., 2002. "Searching for the Optimal Defence Expenditure: An Answer in the Context of the Greek – Turkish Arms Race," MPRA Paper 51580, University Library of Munich, Germany, revised 15 Aug 2002.
    4. Bragoudakis Zacharias G. & Zombanakis George A., 2017. "Earning a Peace Dividend in a Crisis Environment: The Greek Case," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 23(3), pages 1-15, August.
    5. A. S. Andreou & K. E. Parsopoulos & M. N. Vrahatis & G. A. Zombanakis, 2002. "Optimal versus required defence expenditure: The case of the Greek-Turkish arms race," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(4), pages 329-347.
    6. Andreou, Andreas & Zombanakis, George, 2003. "Measuring Relative Military Security," MPRA Paper 78660, University Library of Munich, Germany, revised 14 Jul 2003.
    7. Andreou, Andreas S. & Zombanakis, George, 2003. "The Greek-Turkish Arms Race Using Artificial Neural Networks," MPRA Paper 78576, University Library of Munich, Germany, revised 14 Jul 2003.
    8. Andreou, Andreas S. & Zombanakis, George A., 2001. "A Neural Network Measurement of Relative Military Security: The Case of Greece and Cyprus," MPRA Paper 14539, University Library of Munich, Germany, revised 2001.
    9. Andreou, Andreas S. & Zombanakis, George A., 2003. "Intelligent information systems for defence problems," MPRA Paper 38637, University Library of Munich, Germany.
    10. Andreou, Andreas S. & Zombanakis, George A., 2000. "Financial Versus Human Resources in the Greek-Turkish Arms Race: A Forecasting Investigation Using Artificial Neural Networks," MPRA Paper 13892, University Library of Munich, Germany.
    11. Arkadiusz Letkiewicz & Krystian Maczka, 2021. "IT System Functioning in the Polish Police as a System Supporting Management Processes," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 4), pages 948-959.
    12. Andreou Andreas S & Zombanakis George A, 2006. "The Arms Race between Greece and Turkey: Commenting on a Major Unresolved Issue," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 12(1), pages 54-69, September.
    13. A. S. Andreou & K. E. Parsopoulos & M. N. Vrahatis & G. A. Zombanakis, 2004. "An alliance between Cyprus and Greece: assessing its partners' relative security contribution," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(5), pages 481-495.

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    More about this item

    Keywords

    Key Words: Defense Burden; Foreign Military Debt; Growth Rate; Investment; Education.;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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