The peace dividend: military spending cuts and economic growth

Malcolm Knight, Norman Loayza () and Delano Villanueva

No 1577, Policy Research Working Paper Series from The World Bank

Abstract: Conventional wisdom suggests that reducing military spending may improve a country's economic growth, but empirical studies have produced ambiguous results on this point. Extending a standard growth model, the authors exploit both cross-section and time-series dimensions of available data to get consistent estimates of the growth-retarding effects of military spending. Military spending is growth-retarding because of its adverse impact on capital formation and resourceallocation. Model simulation results suggest a substantial long-term peace dividend - in the form of higher capacity output per capita - that may result from: 1) markedly lower military spending in most regions in the late 1980s; and 2) future cuts in military spending if global peace is secured.

Keywords: Legal Products; Peace&Peacekeeping; Economic Theory&Research; Environmental Economics&Policies; Decentralization; Peace&Peacekeeping; Achieving Shared Growth; Inequality; Economic Theory&Research; Legal Products (search for similar items in EconPapers)
Date: 1996-02-28
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (162)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... d/PDF/multi0page.pdf (application/pdf)

Related works:
Journal Article: The Peace Dividend: Military Spending Cuts and Economic Growth (1996)
Working Paper: The Peace Dividend: Military Spending Cuts and Economic Growth (1995)
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:wbk:wbrwps:1577

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().