Defense Expenditures, Economic Growth, and The “Peace Dividendâ€

Alex Mintz and Randolph T. Stevenson
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Alex Mintz: Texas A&M University
Randolph T. Stevenson: University of Rochester

Journal of Conflict Resolution, 1995, vol. 39, issue 2, 283-305

Abstract: Despite the proliferation of studies on the impact of military spending on economic growth, it is still not known whether defense spending hinders or promotes growth. Most analysts attribute the lack of consistent/robust findings to three problems: the lack of a sound theory of defense-growth trade-offs, an inadequate research design, and a failure to account for the externality effects that defense spending might have on other parts of the economy. In this study, the authors try to remedy these problems by (1) relying on a model of the defense-growth trade-off that is grounded in the neoclassic theory of growth, (2) estimating this model using time-series data on 103 countries, and (3) explicitly accounting for the externality effects of defense spending by the use of a multisectorial model. The results show that, regardless of the specification of the models, and contrary to most cross-national studies, military expenditures have a significant positive effect on growth in only about 10% of the cases.

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jocore:v:39:y:1995:i:2:p:283-305

DOI: 10.1177/0022002795039002004

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