Military Burden, Security Needs, and Economic Growth in the Middle East

Abstract

Economic theory and existing empirical studies do not unambiguously indicate whether higher military expenditures retard or promote economic growth, nor have there been systematic attempts to discern the sources of military spending to help determine how much of that spending can realistically be reduced. This article examines the theoretical link between military spending and economic growth, explores the domestic and regional causes of this spending, and tests a model incorporating a simultaneous relationship between military spending and economic growth in a pooled time-series cross-sectional analysis on various groupings of Middle Eastern states. While the analysis is shown sensitive to assumptions about causality and the numerous problems of pooled data, the results indicate that higher military spending has suppressed economic growth in the Middle East region even when alternative measures of the military burden are used.

Military expenditure and economic growth: A meta-analysis

“…The negative effect on investment has knock-on effect on growth. There are a number of studies that applied SEM; see for instance Deger and Sen (1983), Deger (1986), Lebovic and Ishaq (1987), Gyimah-Brempong (1989), Dunne andMohammed (1995) Galvin (2003). 4 Finally, considerable empirical studies of milexp-growth apply some variant of Barro-type growth specifications.…”

Military Spending and Economic Growth: The Case of Iran

“…There are some studies which argue in support of the positive growth effects of military spending. In his seminal works, Benoit (1973Benoit ( , 1978 show The second group of studies point out the negative growth effects of military spending through different channels such as lower saving rates and investment, reduction of other productive spending (health and education), higher budget deficit, higher debt, increase of corruption, higher tax rates and lower productivity of private sector and lower capital formation and resource extraction (see, for example, Deger 1986;Chan 1988;Lebovic and Ishaq, 1987;Mintz and Huang, 1990;Scheetz, 1991;Asseery, 1996;Dunne and Vougas, 1999;Gupta et al, 2001;and Dunne et al, 2002). Chowdhury (1991) examines the Granger causality between military spending and economic growth for the 55 developing countries.…”

Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria

“…[Eken et al (1997)] Thus it is important to identify which government functions are productive and which are not. While there have been several attempts to investigate the relationship between military expenditures and economic growth for Mid-East countries, [Askari and Corbo (1974), Cohen and Ward (1996), DeRouen, K. (1995), Lebovic and Ishaq (1987), among others] to the best of our knowledge there have been no investigations of the causal relationship between the various components of government spending separated into productive and nonproductive spending and economic growth.…”