Spend on what? Insights on military spending efficiency

Dimitrios Dimitriou, Eleftherios Goulas and Christos Kallandranis

European Journal of Political Economy, 2025, vol. 88, issue C

Abstract: This study investigates the role of military sector efficiency on the economic growth-defence spending relationship in 135 countries from 1992 to 2020. Efficiency stems from capital intensity of the military sector and the existence of technological externalities and economies of scale associated with armaments exports. Our findings indicate that a higher level of efficiency can moderate or eliminate the adverse effects of military burden on economic growth. Introducing alliance participation, we highlight the ‘protective’ role of NATO for its member-states with lower efficiency levels, while SCO seems to be less supportive.

Keywords: Economic growth; Military spending; Efficiency; Defence alliance (search for similar items in EconPapers)
JEL-codes: D74 H56 O30 O47 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:88:y:2025:i:c:s0176268025000564

DOI: 10.1016/j.ejpoleco.2025.102696

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