MILITARY SPENDING AND ECONOMIC GROWTH IN SRI LANKA: A TIME SERIES ANALYSIS

Albert Wijeweera and Matthew Webb

Defence and Peace Economics, 2009, vol. 20, issue 6, 499-508

Abstract: In this paper, we employ a VAR analysis to examine the nexus between military spending and economic growth in Sri Lanka which, due to the civil war there, has witnessed a significant increase in military spending over the last three decades while also recording healthy economic growth. The study finds that, compared with non-military spending, military spending exerts only a minimal positive impact on real GDP. Over a 10-year period, a 1% increase in non-military spending increases GDP by 1.6%. In contrast, military spending only increases GDP by 0.05%, suggesting that the economic benefits for Sri Lanka from a sustained peace may be considerable.

Keywords: Military spending; Sri Lanka; Economic growth; VAR analysis (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (29)

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DOI: 10.1080/10242690902868301

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