Convergence of Military Expenditures in MENA Countries: Evidences from a Fourier Panel Unit Root Test with Multiple Breaks

İbrahim Sezer Belliler ()
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İbrahim Sezer Belliler: Harran Üniveristesi, İktisadi ve İdari Bilimler Fakültesi, Ekonometri Bölümü, Şanlıurfa, Türkiye

EKOIST Journal of Econometrics and Statistics, 2023, vol. 0, issue 39, 183-199

Abstract: Nowadays, even regional conflicts can lead to political and military crises on a global scale, and military expenditures have become more important in countries’ budgets. Countries that shape their military spending according to the political and military organizations of which they are a part are expected along with their neighbors to exhibit convergent behavior in this regard. This study examines the military expenditures of 12 Middle East and North Africa (MENA) countries (i.e., Algeria, Bahrain, Egypt, Iran, Israel, Jordan, Kuwait, Morocco, Oman, Saudi Arabia, Tunisia, and Turkey) from 1977-2021. The null hypothesis stating no cross-sectional dependence to exist has been rejected by all of the Breusch-Pagan (1980), the scaled Lagrange multiplier (LM) Pesaran and Pesaran’s cross-sectional dependency (CD; 2004), and also LM (2012) tests. In this context, using unit root tests that take into account cross-sectional dependence would be more accurate. Bahmani-Oskooee et al.’s (2014) Fourier panel unit root test with multiple breaks, which takes into account cross-sectional dependency and heterogeneity between units, was used to perform the convergence analysis of military burdens. According to the research findings, the alternative hypothesis that some MENA countries did not imply convergent behavior could not be rejected. The military expenditures of Bahrain, Jordan, Kuwait, Saudi Arabia, and Turkey were found to converge with the MENA mean and the military expendituresof the United States and Israel. Due to being a NATO member, Turkey’s behavior is expected to converge with the United States. Turkey and Saudi Arabia’s motivation for enhancing their weight in the region also explains their convergence with the US and Israel. Events such as the Gulf War and the Arab Spring that took place in the region stand out with regard to sudden break dates. The findings were determined to be statistically significant in accordance with the F test performed on the Fourier terms added for each country. In conclusion, the findings are significant for understanding how the military expenditures of MENA countries are formed.

Keywords: Military expenditures; convergence hypothesis; Fourier panel unit root (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ist:ekoist:v:0:y:2023:i:39:p:183-199

DOI: 10.26650/ekoist.2023.39.1190962

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