STAVRINOS, VASILIOS G. and ZOMBANAKIS, GEORGE A. (1998): The Vicious Cycle of the Foreign Military Debt. Published in: EUROPEAN RESEARCH STUDIES , Vol. 1, No. 1 (May 1998): pp. 5-26.
Download (217Kb) | Preview
This paper aims at estimating first the effects of defense spending on the main determinants of growth, and second the extent to and the channels through which the military debt of Greece influences the overall debt burden of the country, and consequently the critical determinants of economic growth and development. Increased imports of sophisticated weapons and military equipment can be financed at the cost of investment (guns v. ploughshares), or/and at the cost of human capital formation (guns v. butter and chalk), or at the cost of increasing the foreign debt of the country. It is this last case which is investigated in this paper. Our empirical results indicate that whatever the necessity and the benefits of the security aspect of defense, its economic costs are quite substantial. The military as a claimant of resources has a negative and non trivial effect on physical capital accumulation, and human capital formation. Moreover, financing increased military imports through borrowing from abroad has a negative and significant effect on the determinants of growth and development.
|Item Type:||MPRA Paper|
|Original Title:||The Vicious Cycle of the Foreign Military Debt|
|English Title:||The Vicious Cycle of the Foreign Military Debt|
|Keywords:||Key Words: Defense Burden, Foreign Military Debt, Growth Rate, Investment, Education.|
|Subjects:||F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems
H - Public Economics > H5 - National Government Expenditures and Related Policies > H56 - National Security and War
|Depositing User:||GEORGE ZOMBANAKIS|
|Date Deposited:||10. Oct 2009 05:54|
|Last Modified:||16. Feb 2013 23:37|
Aben, J. and N. Daurès (1993), ‘Chalk v. Guns: Some Economic Consequences of an Announced French Scenario’, Defence Economics, v. 4, no. 4, pp.353-364.
Athanasoglou, P.P. and G.A. Zombanakis (1992), ‘External Debt and Macroeconomic Policy in a Small, Open Economy: The Case of Greece’, in C. Miner and N. Snowden (eds.), External Imbalances and Policy Constraints in the 1990’s, London: Macmillan Press.
Balfousias, A. and V.G. Stavrinos (1996), ‘The Greek Military Sector and Macroeconomic Effects of Military Spending in Greece’, Ch. 10, pp. 191-213 in N.P. Gleditsch, O. Bjerkholt, A. Cappelen, R.P. Smith and J.P. Dunne (eds.), The Peace Divident, Amsterdam: Elsevier Science B.V.
Benoit, E. (1978), ‘Growth and Defense in Developing Countries’, Economic Development and Cultural Change, v. 26, no. 2, pp. 271-280.
Cappelen, A., N.P. Gleditsch and O. Bjerkholt (1984), ‘Military spending and Economic Growth in the OECD Countries’, Journal of Peace Research, v. 21, no. 4, pp. 361-373.
Chan, S. (1984), ‘Defense Spending and Economic Performance: Correlates Among the OECD Countries’ Paper Presented at the 25th Annual Meeting of the International Studies Association, Atlanta, G.A., 27-31 March.
Chan, S. (1985), ‘The Impact of Defense Spending on Economic Performance: A Survey of Evidence and Problems’, Orbis, v. 29, no. 2, pp. 403-434.
Chan, S. (1988), ‘Defense Burden and Economic Growth: Unraveling the Taiwanese Enigma’, American Political Science Review, v. 82, no. 3, pp. 913-922.
Chan, S. (1992), ‘Military Burden, Economic Growth, and Income Inequality: The taiwan Exception’, Ch. 9, pp. 163-178 in S. Chan and A. Mintz (eds.), Defense, Welfare, and Growth, London & N. York: Routledge.
Deger, S. (1986), Military Expenditure in Third World Countries. The Economic Effects, London: Routledge.
E.C. (1994), ‘The Economic and Social Impact of Defense Spending and the Military on the Regions of the Community’, Regional Development Studies, Brussels: European Community, DGXVI.
Gleditsch, N.P., A. Cappelen and O. Bjerkholt (1994), The Wages of Peace: Disarmament in a Small Industrialized Economy, London: SAGE, for International Peace Research Institute, Oslo.
Goertz, G. and P.F. Diehl (1986), ‘Measuring Military Allocations: A Comparison of Different Approaches’, Journal of Conflict Resolution, v. 30, pp. 553-581.
Gold, D. (1990), ‘The Impact of Defense Spending on Investment, Productivity and Growth’, Washington D.C.: Defense Budget Project.
Gold, D. (1993), ‘Military Spending and Investment in the United States’, Ch. 20, pp. 288-303 in J. Brauer and M. Chatterji (eds.), Economic Issues of Disarmament, New York: New York University Press.
Hartley, K. and N. Hooper (1990), The Economics of Defense, Disarmament, and Peace: An Annotated Bibliography, Aldershot & Brookfield, VT: Elgar.
Hendry, D.F. (1986), ‘Empirical Modelling in Dynamic Econometrics’, Applied Economics Discussion Paper, no. 1, University of Oxford.
Herrera, R. (1994), Statistics on Military Expenditure in Developing Countries : Concepts, Methodological Problems and Sources, Paris : OECD.
Isard, W. and C.H. Anderton (1992), ‘Survey of the Peace Economics Literature’, Ch. 1, pp. 1-55 in W. Isard and C.H. Anderton (eds.), Economics of Arms Reduction and the Peace Process: Contributions from Peace Economics and Peace Science, Amsterdam: Elsevier/North Holland.
Johansen, S. and K. Juselious (1990), ‘Maximum Likelihood Estimation and Inference on Gointegration’, Oxford Bulletin of Economics and Statistics, v. 52, pp. 169-210.
Kaldor, N. (1979), ‘Equilibrium Theory and Growth Theory’, in M. Baskia (ed.), Economics of Human Welfare: Essays in Honour of Tibor Scitovsky, New York: Academic Press.
Klein, L.R., Fu-chen Lo and W. McKibbin, eds. (1995), Arms Reduction: Economic Implications in the Post-Cold War Era, Tokyo: United Nations University Press.
Kollias, C. (1995), ‘The Effects of External Security Considerations on Defense Expenditure in the Context of Greek-Turkish Bilateral Relations’, Review of Social, Economic, and Administrative Studies, V. 9, no. 1, pp. 135-147.
Lazaretou, S. and P. Kappopoulos (1993), ‘Modelling the Demand for Greek Defense Expenditure: An Error Correction Approach’, Cyprus Journal of Economics, v. 6, no. 1, pp. 73-86.
Lindgren, G. (1988), ‘Armaments and Economic Performance’, Ch. 8, pp. 169-197 in P. Wallensteen, (ed.), Peace Research, Armaments, and Challenges, Boulder CO & London: Westview.
Looney, R.E. (1992), ‘The Impact of Military Expenditures on Human-Capital Development in the Arab Gulf States’, Ch. 11, pp. 198-210 in S. Chan and A. Mintz, (eds.), Defense, Welfare and Growth, London & New York: Routledge.
Mintz, A. and R.T. Stevenson (1995), ‘Defense Expenditures, Economic Growth, and the «Peace Divident»: A Longitudinal Analysis of 103 Countries’, Journal of Conflict Resolution, v. 39, no. 2, pp. 283-305.
Mosley, H.G. (1985), The Arms Race: Economic and Social Consequences, Lexington, MA: Heath.
Perron, P. (1990), ‘The Great Crash, the Oil Price Shock and the Unit Root Hypothesis’, Econometrica, v. 57, pp. 1361-1401.
Pivetti, M. (1992), ‘Military Expenditure as a Burden on Growth, an Underconsumptionist Critique’, Cambridge Journal of Economics, v. 16, no. 4, pp. 373-384.
Platias, A. (1997), ‘Greek Deterrence Strategy’, Greek Diplomatic Life, no. 228, January, Athens.
Renner, M., ed. (1992), Economic Adjustment after the Cold War: Strategies for Conversion, United Nations Institute for Disarmament Research.
Rothschild, K.W. (1973), ‘Military Expenditure, Exports, and Growth’, Kyklos, v. 26, pp. 804-814.
Stavrinos, V.G. (1992), ‘Defense Expenditures in Arms Competition: Modelling and Causality Analysis’, Greek Economic Review, V. 14, no. 1, pp. 115-128.
Stavrinos, V.G. (1993), ‘Growth and Defense in Developing Countries: The Case of Greece’, pp. 813-831 in Essays in Honor of Professor S. Zevgaridis, Thessaloniki: University of Macedonia.
Stavrinos, V.G. (1993a), ‘The Economic Effects of Defense Spending: The Case of Greece’, Mimeo, Dept. Of Economics, University of Athens.
Stavrinos, V.G. (1997), ‘Comparative Analysis of Military Expenditure for Greece and Turkey: Some Critical Trends’, Yearbook 1997, Institute of International Relations, Athens (in Greek, forthcoming).
UNIDIR (1993), Economic Aspects of Disarmament: Disarmament as an Investment Process, UNIDIR/92/94, United Nations Publication No. A/47/150, New York: United Nations for United Nations Institute for Disarmament Research.
Ward, M.D., D.R. Davis and C. Lofdahl (1995), ‘A Century of Tradeoffs: Defense and Growth in Japan and the United States’, International Studies Quarterly, v. 39, no. 1, pp. 27-50.