Military expenditure and economic growth in Middle Eastern countries: A dynamic panel data analysis

Yildirim J., Sezgin S., Ocal N.

DEFENCE AND PEACE ECONOMICS, vol.16, no.4, pp.283-295, 2005 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 16 Issue: 4
  • Publication Date: 2005
  • Doi Number: 10.1080/10242690500114751
  • Page Numbers: pp.283-295
  • Keywords: military expenditure, economic growth, defence economics, dynamic panel data analysis, DEFENSE EXPENDITURES, CAUSAL-ANALYSIS, TIME-SERIES, MODEL


Defence expenditures have both costs and benefits to the economy. The costs of defence expenditures are mainly emphasized as opportunity costs. On the other hand, defence spending may have growth-promoting potential benefits: a rise in defence spending may result in a higher aggregate demand, production and employment. This paper examines empirically the effects of military expenditures on economic growth for Middle Eastern countries and Turkey, for the time-period 1989-1999. The relationship between military expenditure and economic growth is investigated by using cross-section and dynamic panel estimation techniques. Empirical analysis indicates that military expenditure enhances economic growth in the Middle Eastern countries and Turkey as a whole.