Military expenditure, threats, and growth

Joshua Aizenman and Reuven Glick

No 2003-08, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: This paper clarifies one of the puzzling results of the economic growth literature: the impact of military expenditure is frequently found to be non-significant or negative, yet most countries spend a large fraction of their GDP on defense and the military. We start by empirical evaluation of the non- linear interactions between military expenditure, external threats, corruption, and other relevant controls. While growth falls with higher levels of military spending, given the values of the other independent variables, we show that military expenditure in the presence of threats increases growth. We explain the presence of these non-linearities in an extended version of Barro and Sala-i-Martin (1995), allowing the dependence of growth on the severity of external threats, and on the effective military expenditure associated with these threats.

Keywords: Defense industries; Econometric models; Economic development (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.frbsf.org/economic-research/files/wp03-08bk.pdf (application/pdf)

Related works:
Journal Article: Military expenditure, threats, and growth (2006)
Working Paper: Military Expenditure, Threats, and Growth (2003)
Working Paper: Military Expenditure, Threats, and Growth (2003)
Working Paper: Military Expenditure, Threats, and Growth (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2003-08

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().