The rise and impact of the military economy in Europe

Marco Stamegna, Paolo Maranzano, Sara Mombelli and Mario Pianta

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

Abstract: Europe's military economy is investigated in this paper with a review of the relevant literature and with an analysis of the rise in military expenditures, of the relationships with long-term growth and structural change, and of the macroeconomic impacts. We consider the group of NATO EU members; France, the UK, Germany, Italy, Spain and the group Central Eastern European countries -Poland, Hungary, the Czech Republic, and the Slovak Republic investigating long term dymanics since the 1970s, and focusing on the 2014-2024 period for the recent process of rearmament. We show the imbalance between the rapid expansion of military expenditure -particularly in arms and equipment- and the modest growth of aggregate economic indicators . The contrasting trajectories of military expenditures and manufacturing production in France and UK o the one hand and, on the other hand, of Germany, Italy and Spain and of Central Eastern EU countries are documented. Finally, we carry out input-output analyses for the five largest European economies estimating the value added and employment multipliers associated with an increase in arms expenditure and compare them with those of environmental protection, education, and health spending. We find that the militarisation of European economies is generally assocated to worse economic perfomances.

Keywords: Military expenditure; arms acquisition; industry specialisation; input-output; economic impact (search for similar items in EconPapers)
Date: 2026-05-14
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