Military Spending and Economic GrowthNo 708, Working Papers from Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol Abstract: This paper proposes to test the relationship between military expenditure and economic growth by including the impact of the share of military and civilian components of government expenditure in an economic growth model with endogenous technology. In this framework, we empirically consider the hypothesis of a nonlinear effect of military expenditure on economic growth. The comparison between costs and benefits of defence sector has traditionally explained the nonlinear relationship. This paper suggests that shocks to insecurity may also be a source of nonlinearity as they determine a re-allocative effect within government expenditure. While parametric partial correlations are in line with empirical findings, the robustness of estimations is tested by using a nonparametric approach. The negative relationship between military expenditure and growth in countries with high levels of military burden predicted by theory becomes significant only after including a proxy for re-allocative effects in the growth equation. Keywords: Economic growth; military burden; cross-section estimations (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:uwe:wpaper:0708 Access Statistics for this paper More papers in Working Papers from Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol Contact information at EDIRC. |
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