Military expenditures and Growth

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Military expenditures and Growth

• Davut Taser-02010606
• Armagan Çetin-02010775

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Outline

• The Methods
• What is growth?
• Growth rate of countries
• Military expendtirues?What it means for countries
• Results of some articles

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The Methods

• We look to the literature and access some
  articles which was examined to relationship btw
  growth and military expenditures
• We collect some data from WB,IMF,SIPRI
• We compare countries by military expenditures and
  growth rates
• We get some results about our topic

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What is growth?

• Increase of per capita gross domestic product
  (GDP)
• Is primarily driven by improvements in
  productivity
• Economic growth long run short-run variation
  of economic growth is termed the business cycle

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Growth rates of countries

• Source Eurostat

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Military Expenditures

• Share of military expenditures in GDP

Tunisia 1,3
Angola 4,2
Botswana 3
Burkina Faso 1,2
Cameroon 1,6
Cape Verde 0,5
Central African Rep. 1,8
Chad 6,2
Canada 1,5
USA 4,7
Jamaica 0,9
Mexico 0,5
Argentina 1
Bolivia 2
Brazil 1,6
Chile 3,5
Germany 1,4
Denmark 1,4
Estonia 2,3
Finland 1,5
Netherlands 1,5
Norway 1,6
Poland 1,8
Portugal 2,1
Turkey 2,7
UK 2,7
Saudi Arabia 11,2
Syria 4
UAE 7,3
Source SIPRI
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What does military expenditures mean for
countries?

• personnel
• all expenditures on current personnel, military
  and civil
• retirement pensions of military personnel
• social services for personnel and their families
• operations and maintenance
• procurement
• military research and development
• military construction
• military aid (in the military expenditures of the
  donor country)

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Military Expenditure and Growth in Less Developed
Countiers by Saadet Deger and Ron Smith (1983)

• A model to examine the interaction of military
  expenditure, savings, and growth
• Cross-sectional data for 50 LDCs
• Military expenditure had a small positive effect
  on growth through modernization effects and
  larger negative effects through savings

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Defense Spending and Economic Growth in LDCs -
Lisa M.Grobar and Richard C. Porter (1989)

• most important negative effect is that higher
  military spending reduces national saving rates,
  thereby reducing the rate of capital accumulation
  
• The existence of positive effects of military
  spending on econoic growth, still cannot be
  ruled out
• Depend how the expenditures are allocated across
  labor, domestic capital, and important costs

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Military Expenditure,government size and
economics Growth in the Middle East in the Period
1973-85 by Mikael Linden

• The result of article indicate that military
  expenditures have a negative effect on GNP
  growth.
• However,capital formation and high oil prices
  make it possible for these countries to sustain
  positive GNP effect.

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Defense Expenditures and Economic Growth in
Developing CountriesP.C.Federiksen-Robert
E.Looney

• The article shows that there is strong
  relationship between growth rate and
  mil.expenditures for developed countries.
• But,there is negative relationship for less
  developed countries

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Military Expenditure and Economic Growth in
Greece 1960-90Nicholas Antonakis

• For Greece,mil.expenditure may effect economic
  growth through 3 mechanism
  a)the whole host of direct and indirect spinoffs
  
  b)the reallocation
  of resources
  c)the creation of new
  resources

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Defense Expenditures,Economic Growth and the
Peace DividendAlex Mintz and Chi Huang

• Article examine USA economy and mil.expenditures
• In the long run lower military spending
  encourages investments which in turn promotes
  economic growth

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World Defense Expenditures byEmile Benoit,Harold
Lubell,Sylvia Schuman

• According to article,if one country increases its
  military expenditure and other country who has
  different ideology also increases its
  mil.expenditures.
• For instance USA and SSCR (former Russia)

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conclusion
All in all, as you see, researches that has done
to investigate growth and military expenditures
is controversy among countries.It can vary with
different situation.