Relationship between Military Expenditure and Economic Growth in ASEAN: Evidence from Indonesia

Chairil, Tangguh; Sinaga, Dedy; Febrianti, Annisa

doi:10.21512/jas.v1i2.63

Cited by 21 publications

(20 citation statements)

References 12 publications

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“…The regression coefficient obtained was 4.869; as such, it could be said that every additional share of provincial expenditure on security and public order will expand economic growth by about 4.9%. Similar results were found by (Chairil, Sinaga, & Febrianti, 2013), whoshowed that, in Indonesia, government expenditures on the military had a positive effect on economic growth. Although the allocation of public expenditures for security and public order is connected only indirectly to the activities which create economic growth, the regression results show that provinces with larger public expenditures on security and public order enjoy greater economic growth.…”

Section: Hausman Testsupporting

confidence: 83%

Do Productive Government Expenditures Affect Economic Growth? Evidence from Provincial Governments across Indonesia

Sijabat

2017

JGP

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This study is intended to examine the impacts of productive expenditures on economic growth on the 25 provinces found in Indonesia before fiscal decentralization (covering 1994-1997) and 33 provinces after decentralization over the period [2011][2012][2013][2014][2015]. The empiric approach has been implemented through a panel data approach and regression model estimated to follow the endogenous growth model of Barro (1990). The main findings of this research show that: (1) provincial governments' productive expenditures in education promoted economic growth in the 25 pre-decentralization provinces; and (2) productive expenditures in the security and public order sector, health and education sector have promoted economicgrowthinthe 33 post-decentralization provinces. From these results, it can be concluded that this study has contributed to economic literature by indicating that different types of productive government expenditures offer different impacts on economic growth. The policy implications which can be formulated from the results of this study are that provincial governments should promote and provide incentives for private investments in the public sector because only the education sector (before fiscal decentralization) and the security and public order sector as well as the education sector (after fiscal decentralization) have a statistically significant role in promoting economic growth. This can be realized through public-private partnership, which has greatly increased the performance of public-sector investment around the world. Future research, using relevant control variables to estimate the effects of productive expenditures on economic growth, will provide a greater empiric contribution to the literature. Keywords: productive expenditures, economic growth, fiscal decentralization. JEL Classification: H11, O40, H5. 2 ABSTRAKPenelitian ini dimaksudkan untuk menguji dampak dari produktivitas pertumbuhan ekonomi di 25 provinsi yang ada di Indonesia sebelum desentralisasi fiskal (meliputi 1994-1997) dan 33 provinsi setelah desentralisasi selama periode 2011-2015. Pendekatan empiris ini telah dilaksanakan melalui pendekatan data panel dan model regresi yang diperkirakan mengikuti model pertumbuhan endogen Barro (1990). Temuan utama dari penelitian ini menunjukkan bahwa: (1) pengeluaran produktif pemerintah provinsi dalam pendidikanmempromosikanpertumbuhanekonomidi25provinsipra-desentralisasi;dan (2) produktif penditures dalam keamanan dan ketertiban sektor publik, kesehatan dan sektor pendidikan yang telah mendorong pertumbuhan ekonomi di 33 provinsi pascadesentralisasi. Darihasil tersebut, dapat disimpulkan bahwa penelitianini telah memberikan kontribusi terhadap literatur ekonomi dengan menunjukkan bahwa berbagai jenis tulisan peerintah secara produktif mengeluarkan tawaran dampak yang berbeda terhadap pertumbuhan ekonomi. Implikasi kebijakan yang dapat dirumuskan dari hasil penelitian ini adalah bahwa pemerintah provinsi harus mempromosikan dan memberikan insentif bagi investasi swasta...

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Section: Hausman Testsupporting

confidence: 83%

Do Productive Government Expenditures Affect Economic Growth? Evidence from Provincial Governments across Indonesia

Sijabat

2017

JGP

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“…It may be noticed that in academic context defense spendingeconomic growth nexus has been analyzed from different theoretical aspects. Theoretical insights have revealed unidirectional, bidirectional or non-existent defense spendingeconomic growth relationships (Harley & Sandler, 2011;Feridun et al, 2011;Alptekin & Levine, 2012;Danek, 2013;Chairil et al, 2013;Khalid & Mustapha, 2014;Duella, 2014;Topcu & Aras, 2015). Moreover, the impact of defense spending on economic growth has been either positive or negative.…”

Section: Introductionmentioning

confidence: 99%

Tendencies and Relations of Defense Spending and Economic Growth in the EU Countries

Dudzevičiūtė¹,

Peleckis²,

Peleckienė³

2016

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European countries are surrounded by growing conflicts and security threats. For every country it is necessary to ensure internal and external security. Defense should be seen as preventative spending as well as like an insurance policy. In terms of that, many policy makers have to decide how much money should be spent on defense. This paper investigates the tendencies and relationships of defense spending and economic growth in the European Union (EU) countries taking into consideration the level of countries' economic development over the period of 2004-2013. The authors have done this by considering a number of descriptive statistical indicators and applying Granger testing. Based on the real gross domestic product (GDP) per capita, the European Union countries have been classified into five categories. The association between defense spending and economic growth has been estimated. On the basis of causality testing, the prevailing causality direction is from defense spending to economic growth in the group of countries of a very high level of economic development. However, in the group of countries of lower or mid-level of economic development the causality runs from economic growth to defense spending. For the remaining group of countries, no causal relationship has been detected between these two variables. The paper is concerned with defense spending and economic growth only. The authors have not considered all the other factors. That is the major limitation of this paper. Despite of this, the research highlights the key trends and relationships, which should be of particular interest to policy makers. However, every country is unique, and the economic growth or decline do not imply spontaneous change in defense expenditure. Prospective threats may be the most important factor for the expansion of defense spending.

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“…This finding is in line with [3] and [12] that also proposed the impact of military expenditure on economic growth to be non-significant or negative. In contrary with [13] and [14], that found a positive relationship between military expenditure on economic growth. On the causality analysis, the Granger Causality test revealed a unidirectional relationship running from GDP to military expenditure.…”

Section: Conclusion and Policy Recommendationsmentioning

confidence: 60%

Military Expenditure and Economic Growth Empirical Evidence from Malaysia

2019

IJRTE

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The relationship between military expenditure and economic growth has attract ample interest among economists as well as policy makers. The importance of expanding defence expenditure is substantially to coincide with national security and defence. The purpose of this study is to explore the impact of military expenditure on economic growth in Malaysia. An econometrics time series analysis is employed using ARDL estimates spanning from the year 1979 to 2017. The empirical findings reveal a negative relationship between military expenditure and Gross Domestic Products (GDP). Despite the inverse relationship between defence expenditure and economic growth, Malaysia should not neglect the investment on efficient military expenditure, as it has proven that in some countries, defence expenditure promotes a long run economic growth by promoting more job opportunities, protecting the nation and thus, achieving sustainable development. It is recommended to add more variables in future study that can relate security and defence for the country like numbers of crime, and numbers of migrants and refugees. Conclusively defence and security are the important factors for the country in generating the world and public’s confidence and to captivate foreign direct investment. Hence, adequate policy making on military expenditure are utmost important to promote economic growth

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Relationship between Military Expenditure and Economic Growth in ASEAN: Evidence from Indonesia

Abstract: Abstract

Cited by 21 publications

References 12 publications

Do Productive Government Expenditures Affect Economic Growth? Evidence from Provincial Governments across Indonesia

Do Productive Government Expenditures Affect Economic Growth? Evidence from Provincial Governments across Indonesia

Tendencies and Relations of Defense Spending and Economic Growth in the EU Countries

Military Expenditure and Economic Growth Empirical Evidence from Malaysia

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