Defense Expenditures and Economic Growth in Developing Countries

Bringing the Military Back in: Military Expenditures and Economic Growth 1990 to 2003

“…Benoit's (1973) landmark cross-national study shows that defense spending may stimulate aggregate demand leading to economic growth, although his effort has been critically evaluated in subsequent research (Ball 1983). Others report favorable defense spending effects (Kennedy 1974;Whynes 1979), especially over the longer term (Babin 1990), in resourcerich lesser developed countries (Fredericksen and Looney 1982) or in service-related sectors only (Hall 1988). Contrasting results show no consistent defense spending effects (Chowdhury 1991), inconclusive findings (Biswas and Ram 1986) or negative effects for industrialized countries (Smith 1977).…”

Does Defence Spending Impede Economic Growth? Cointegration and Causality Analysis for Pakistan

“…Broadly speaking, the findings are mixed and inconclusive with results depending on the country or sample of countries, the time period or the methodology used (for a survey of the findings and the issues see Dunne et al, 2005). In a number of cases, findings suggest that defence expenditures stimulate economic growth through the demand stimulation channel (inter alia: Fredericksen and Looney, 1982;Stewart, 1991;Ward et al, 1991;Dunne et al, 2001;Atesoglu, 2002Atesoglu, , 2009Yildirim et al, 2005). Military expenditures may also lead to improvements in infrastructure while a similar positive effect is also postulated when it comes to the labour force and the technical skills acquired during military training that can then be useful endowments for the civilian life of soldiers once decommissioned (MacNair et al, 1995).…”

Another look at the defense spending and development hypothesis

“…18 Enlarging the sample to 90 countries and using a later time period, Frederiksen and Looney reexamined the resource constrained hypothesis. 19 In this analysis, it was found that the coefficient of the defense variable was not statistically significant for the entire group, was significant for the unconstrained group, and negative but not statistically significant for the constrained group.…”

“…... (1) feeding, clothing and housing a number of people who would otherwise have to be fed, housed, and clothed by the civilian economy; (2) ... providing education and medical care as well as vocational and technical training; ... (3) engaging in a variety of public works; ... ( 4) engaging in scientific and technical specialities ... which would otherwise have to be performed by civilian personnel. 3 On the negative side, Benoit identified three types of possible effects.…”