The Relationships between Military Expenditures and Unemployment in G-20 States

Abstract

The effects of the military expenditure on the economic growth and consequently on the employment has been the primary topic of the discussing in the literature of economics. Considering that the military expenditures generally emerge as a sub-item of the public spending, it has been asserted by the liberal approach that the principle of the non-productiveness of the public sector would be even more applicable in the military expenditures. None the less, using the military spending as a tool to lead an economy that feature underemployment constitutes the positive aspect of the views to the military expenditure and this is also the case of the prediction of the Keynesian economy. In this study, the effects of the military expenditure on the unemployment, which is a reflection of the effects of the economic growth, are analyzed as the subject matter. The findings revealed that the military spending has positive effects on the unemployment in some G20 states while it also has negative effects in some and has neutral effects in others. In addition, it is further indicated that the positive effects are experienced in relatively advanced economies, the negative effects emerge in relatively less developed economies, and the countries with abundant natural resources experience neutral effects.

The Relationship between Defense Expenditures and Employment in NATO Member States: Bootstrap Panel Causality Test

“…The study which used the panel DOLS method revealed that defense expenditures reduced unemployment. Aydemir, Ozdemir, Kabadayı, and Emsen (2016) examined the relationship between unemployment and defense expenditures in G20 countries using data for the 1990-2014 period and reached the conslusion that defense expenditures decreased unemployment by disrupting the efficiency of resources in countries that are considered to be at full employment level. The authors suggested that the classical prediction worked in countries where unemployment rates in the economy were close to natural unemployment rates.…”