The effects of military expenditures on labor productivity, innovation and economic growth for the most militarized countries: panel data analysis

İnal, Veysel; Gürdal, Temel; Değirmenci, Tunahan; Aydın, Mücahit

doi:10.1108/k-06-2022-0852

Cited by 7 publications

(6 citation statements)

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“…Specifically, a one-unit increase in military spending leads to a 4.48% increase in GDP growth, controlling for relevant economic and demographic factors. A recent study conducted by Brigzalová et al (2022), Inal et al (2022), and Yildirim and Öcal (2016 also examined the relationship between military expenditure and economic prosperity in European countries, including Croatia. While their study found a positive correlation between military spending and GDP growth, the effect size was smaller compared to the results of the given study.…”

Section: Discussionmentioning

confidence: 99%

“…A panel study by Inal et al (2022) found that there was a long-run relationship between military expenditures and productivity, innovation, and economic growth in most militarised countries. Nugroho and Purwanti (2021) stated that military expenditure did not significantly influence the economic growth, but it had a positive and significant influence when interacting with other variables.…”

Section: The Relationship Between Military Expenditure and Economic P...mentioning

confidence: 99%

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The Effect of Military Expenditure on Economic Prosperity in Croatia

2024

Futurity of Social Sciences

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The objective of this study was to empirically evaluate the impact of military spending on the economic well-being of the Croatian economy. The objective of the study was as well to find out if military expenditure could bolster the economic growth. Croatia has been among the European nations with significant military expenditures over the past three decades. However, these expenses have substantially decreased due to successful peace initiatives and the country's accession to the European Union. Reflecting on Croatia's history, notably during the Croatian War of Independence, the government significantly augmented its military expenditures. The sample period of the study was for 40 years from 1981 to 2020. An applied econometrics methodology called the 2-Stage Least Squares with Instrumental Variables was utilised in the study. In the first stage, instrumental variables were used to instrument for the endogenous regressors. In the second stage, the predicted values obtained from the first stage were used as explanatory variables in the main regression equation. The study found that the effect of military expenditure on the economic prosperity of Croatia was positive and highly statistically significant. The study addressed an empirical gap in the literature by integrating distinctive characteristics into the model concerning the long-term relationship between Croatia's military expenditure and economic growth. These factors enhanced empirical accuracy and instilled confidence in the broader and diverse literature concerning military expenditure and economic growth. The implication of this study is that investing in the military provides an enabling environment for economic growth to increase.

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Section: Discussionmentioning

confidence: 99%

Section: The Relationship Between Military Expenditure and Economic P...mentioning

confidence: 99%

The Effect of Military Expenditure on Economic Prosperity in Croatia

2024

Futurity of Social Sciences

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“…18,25 Their argument is that defense expenditures lead to technological innovation and advancements, particularly in areas like aerospace communications and logistics. 48 This boosting affect can benefit civilian sectors and accelerate overall productivity gains. Furthermore, supporters of this claim highlight the economic benefits associated with an advancing defense industry, which may influence job creation, high-skilled employment, and export opportunities, all of which can have positive multiplier effects on the economy in terms of productivity.…”

Section: Theoretical and Modeling Backgroundmentioning

confidence: 99%

“…Moreover, although there exist different theories regarding the impact of military spending on productivity, only a limited number of studies have been conducted to empirically investigate these variables. 48…”

Section: Theoretical and Modeling Backgroundmentioning

confidence: 99%

Examining the impacts of military expenditures on economic productivity: a system dynamics approach

Damla Gönül-Sezer,

Demirel

2023

SIMULATION

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The relationship between military expenditures and economic productivity has taken the attention of many researchers and there exist an important number of studies approaching the topic through several techniques. However, there is no consensus among the scholars whether military expenditures trigger economic growth, productivity, and other macroeconomic indicators. Such arguments are mainly due to unclear results obtained from the existing studies, in which the complex relationships between military expenditures and macroeconomics are not fully incorporated. Considering the bidirectional and nonlinear relationships among macroeconomic indicators and complex feedback mechanisms, a system dynamics (SD) model for examining the impacts of military expenditures on economic productivity in Turkey is proposed. The proposed SD model aims to reflect the complex environment surrounding the military spending–economic productivity nexus and to analyze the feedback structures that lead to miscellaneous consequences with delays. A stock–flow model is developed to represent the complex nonlinear relationships and causalities between the variables. Data from SIPRI, the World Bank, and several local statistical sources covering the years 2009–2018 are utilized to simulate the existing case, warfare in neighbors, economic shrinkage scenarios, and the combination of the latter two. The results obtained from the scenarios suggest that short fixes such as importing military products instead of national investments give rise to chronic issues like continual dependence on foreign supply, hence, leading to decrease in overall economic growth. To the best of our knowledge, this is the first attempt to integrate SD methodology with military expenditure and economic productivity analysis.

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“…His causality test results also revealed a bi-directional causality between military expenses and economic growth. Inal et al (2022) used panel cointegration tests to determine the long-run relationship between military expenditures, economic growth, innovation, and labor productivity in countries characterized by Startextensive militarization. Their study concluded that there is a long-run and causal relationship between military spending and the utilized variables.…”

Section: Literature Reviewmentioning

confidence: 99%

Military spending crowding out health and education spending: which views are valid in Egypt?

Elish

Ahmed

AboElsoud

2023

Humanit Soc Sci Commun

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This study examines the relationship between government spending, specifically military spending, government spending on health, government spending on education, and economic growth in Egypt over the period from 1980 to 2021. The paper utilizes a Granger causality test to detect the directional relationship between spending components and GDP growth. Furthermore, an autoregressive distributed lag (ARDL) model, including error-correction models, was established to determine the long- and short-term relationships among these variables. The study contrasts Wagner’s versus Keynes’s views of the government spending relationship with economic growth, with a greater emphasis on Keynes’s argument for military spending enhancing economic growth. While previous studies have investigated the relationship between aggregate spending and economic growth from a single or two-way direction of causality, the present study contributes to the literature by exploring the possibility of military spending crowding out spending on health and education and detecting this causality and dynamic relationship. The empirical results support the Keynesian view of causality from all government spending components to economic growth. However, short- and long-term analyses revealed a negative relationship between military spending and economic growth. Moreover, the short-term impact of government spending on education and health on economic growth is negative, but positive in the long-term. Finally, the causality test revealed that military spending influences health and education spending. Additionally, a unidirectional relationship exists between military spending and health expenditure, which requires further research. The policy implication of this study shows that although spending is exogenous to economic growth, it does not align with the Keynesian view of inducing growth. Instead, spending has negative current and future implications for economic development.

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The effects of military expenditures on labor productivity, innovation and economic growth for the most militarized countries: panel data analysis

Cited by 7 publications

References 72 publications

The Effect of Military Expenditure on Economic Prosperity in Croatia

The Effect of Military Expenditure on Economic Prosperity in Croatia

Examining the impacts of military expenditures on economic productivity: a system dynamics approach

Military spending crowding out health and education spending: which views are valid in Egypt?

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