Arms race and economic growth: The case of India and Pakistan


Yildirim J., Ocal N.

DEFENCE AND PEACE ECONOMICS, cilt.17, ss.37-45, 2006 (SSCI İndekslerine Giren Dergi) identifier identifier

  • Cilt numarası: 17 Konu: 1
  • Basım Tarihi: 2006
  • Doi Numarası: 10.1080/10242690500369231
  • Dergi Adı: DEFENCE AND PEACE ECONOMICS
  • Sayfa Sayıları: ss.37-45

Özet

The hostility between India and Pakistan is believed to have led to an arms race between the two countries, which might have contributed to their retarded economic growth. This paper investigates this twin problem of arms race and economic growth for the time period 1949 - 2003. The empirical results suggest that there is a mutual causal relationship between the military expenditures of India and Pakistan. Even though military expenditure does not Granger cause economic growth in Pakistan, there is causality from military expenditure to economic growth in India. A VAR analysis revealed that military expenditure hinders economic growth in India in the long-run, but it has a growth promoting effect in the short-run.