Military Expenditure and External Debt in South Asia: A Panel Data Analysis

Shujaat Abbas and Wizarat Shahida
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Wizarat Shahida: College of Economics and Social Development, Institute of Business Management, Karachi, Pakistan

Peace Economics, Peace Science, and Public Policy, 2018, vol. 24, issue 3, 7

Abstract: This study investigates the effect of military expenditure on the exploding external debt in five major South Asian economies, i.e. Pakistan, Bangladesh, India, Nepal and Sri Lanka from 1990 to 2015 using panel fixed effect regression model. The estimated result reveals that the external debt of selected South Asian countries is positively determined by their military expenditure, and negatively explained by their domestic investment activities. The study urges the efficient utilization of available capital resources into more productive investment activities to create employment for the labor force. The future prosperity of the region lies in the peaceful resolution of all outstanding disputes and a corresponding reduction in military spending that can make the region safe for domestic and international investments.

Keywords: military expenditure; external debt; economic growth; panel data; South Asia (search for similar items in EconPapers)
JEL-codes: C23 F21 F34 O10 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1515/peps-2017-0045

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