THE EFFECT OF PEACE AND DEFENSE EXPENDITURE ON FOREIGN BORROWING: AN EMPIRICAL PRACTICE ON SELECTED COUNTRIES

Hande BARDAKÇI DOĞAN () and Mahmut Ünsal ŞAŞMAZ ()

Eurasian Business & Economics Journal, 2025, vol. 38, issue 38, 172-183

Abstract: Peace and defense expenditures are considered global public goods due to the absence of competition and exclusion in their consumption. Since the benefits or harms of these goods affect nations and even future generations, they are important for all countries in the world. Therefore, determining the financing sources of peace and defense expenditures is a very important issue. Indeed, one of the financing sources of peace and defense expenditures is external borrowing. Therefore, determining whether there is a relationship between peace and defense expenditures and external borrowing is important for decision makers. In this study, the causality relationship between defense expenditures, peace level, economic growth and external borrowing was investigated in 4 Middle East (Egypt, Iran, Jordan, Lebanon) and Turkey in the period 2007-2017. As a result of the study, a significant and positive relationship was found between defense expenditures and external borrowing in Jordan and Lebanon. No significant relationship was found in other countries. On the other hand, a significant and negative causality relationship was found between the peace level and external borrowing in Egypt and Turkey. No significant relationship was found in other countries.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eas:buseco:v:38:y:2024:i:38:p:172-183

DOI: 10.17740/eas.econ.2024-V38-10

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