The economic impact of arms spending in Germany, Italy, and Spain

Marco Stamegna, Chiara Bonaiuti, Paolo Maranzano and Mario Pianta

MPRA Paper from University Library of Munich, Germany

Abstract: In the last ten years, military expenditures of NATO EU countries (according to NATO definitions and data) have increased by almost 50%, from €145 billion in 2014 to a budget forecast of €215 billion in 2023 (measured in constant 2015 prices). In this context, it is important to assess the economic consequences that the current increase in military spending is likely to have on Europe’s economies. We focus on Germany, Italy and Spain, and we concentrate on arms acquisitions. The article investigates the economic effect of military expenditure on growth and employment and compares it to the impact that could emerge from a similar expenditure for education, health and the environment. We use an input-output methodology – already adopted by several studies - to assess the relevance of imports and of demand towards different sectors providing intermediate inputs. We assess the likely impact on output and jobs of one billion euros of extra spending in arms, and compare it to the outcomes of the same amount spent in education, health and the environment. Our findings show that for all countries non-military public expenditures have a greater impact on the economy and employment than spending for arms acquisition.

Keywords: Military expenditure; arms acquisition; input-output; economic impact; military jobs (search for similar items in EconPapers)
JEL-codes: C67 D57 H50 H56 Q50 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-eec, nep-hme and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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