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Defence, Debt and Democracy: The 3D in South Asia

Bilal Mehmood, Syed Hassan Raza and Rizwan Baqar
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Bilal Mehmood: Department of Economics, GC University, Lahore, Pakistan
Syed Hassan Raza: Department of Economics, NCBAandE, Lahore, Pakistan.
Rizwan Baqar: Department of Economics, University of The Punjab, Pakistan.

International Journal of Economics and Empirical Research (IJEER), 2015, vol. 3, issue 7, 312-319

Abstract: Purpose: South Asian countries are not only ranked as power countries but are also prone to inter and intra country contentions along with political instability. This paper empirically examines the role of defence expenditure and democracy in determining external debt for five South Asian countries. We scrutinized the long run relationship by using large time dimension data from 1972 to 2013 for the selected sample of Asian countries with appropriate variables. Methodology: Econometric precision is fetched by using pooled mean group (PMG) along with mean group (MG), dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS) among others. Findings: The results confirm the presence of long run relationship between military expenditures and external debt, whereas, there exist a negative relationship between democracy and external debt. Recommendations: Policy recommendations are made on the basis of empirical results.

Keywords: Defence; Debt; Democracy (search for similar items in EconPapers)
JEL-codes: H50 H6 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:ijr:journl:v:3:y:2015:i:7:p:312-319