Habibullah, M.S. and Law, Siong-Hook and Dayang-Afizzah, A.M. (2008): Defense spending and economic growth in Asian economies: A panel error-correction approach.
Download (237kB) | Preview
Hoping to contribute to the existing pool of literature, this paper examines the relationship between military expenditure and economic growth in selected Asian countries for the period 1989 to 2004. Our panel unit root test suggests that real GDP per capita and military expenditures are )1(I processes, while the Larsson et al. (2001) panel cointegration test indicates that economic growth and military expendirues are cointegrated. Finally, applying the panel error-correction technique proposed by Pesaran et al. (1999), our empirical results show that defense spending and economic growth in the Asian countries under the period of study are not related.
|Item Type:||MPRA Paper|
|Original Title:||Defense spending and economic growth in Asian economies: A panel error-correction approach|
|Keywords:||Military expenditure; Economic growth; Panel unit root; Panel cointegration; Panel error-correction; Asian economies|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General
H - Public Economics > H5 - National Government Expenditures and Related Policies > H56 - National Security and War
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
|Depositing User:||Baharom Abdul Hamid|
|Date Deposited:||12. Dec 2008 17:50|
|Last Modified:||12. Feb 2013 02:24|
Ades, A. and Chua, H.B. (1997) Thy neighbor’s curse: Regional instability and economic growth. Journal of Economic Growth 2, 279-304.
Al-Yousif, Y.K. (2002) Defense spending and economic growth: Some empirical evidence from the Arab Gulf region. Defence and Peace Economics 13(3), 187-197.
Batalgi, B. Pinnoi, N. (1995) Public capital stock and state productivity growth: Further evidence from an error component model. Empirical Economics 20, 351-359.
Benoit, E. (1973) Defense and economic growth in developing countries. Boston: D.C. Heath & Company.
Benoit, E. (1978) Growth and defense spending in developing countries. Economic Development and Cultural Change 34, 176-196.
Biswas, B. and Ram, R. (1985) Military expenditure and economic growth in less developed countries: An augmented model and further evidence. Economic Development and Cultural Change 34, 361-372.
Breitung, L. (1999) The local power of some unit root tests for panel data. Discussion Paper, Humbolt University,Berlin.
Chang, T., Fang, W., Wen, L.F. and Liu, C. (2000) Defense spending, economic growth and temporal causality: Evidence from Taiwan and mainland China, 1952-1995. Applied Economics 33(10), 1289-1299.
Chen, C.H. (1993) Causality between defence spending and economic growth: The case of Mainland China. Journal of Economic Studies 20(6), 37-43.
Chowdhury, A. (1991) A causal analysis of defense spending and economic growth. Journal of Conflict Resolution 35(1), 80-97.
Dakurah, A.H., Davies, S.P. and Sampath, R.K. (2001) Defense spending and economic growth in developing countries: A causality analysis. Journal of Policy Modeling 23, 651-658.
Deger, S. (1986) Economic development and defense expenditure. Economic Development and Cultural Change 35(1), 179-196.
Deger, S. and Smith, R. (1983) Military expenditure and growth in less developed countries. Journal of Conflict Resolution 27(2), 335-353.
DeGrasse, R.W.Jr. (1993) Military expansion economic decline: The impact of military spending on U.S. economic performance. Armonk, N.Y: M.E. Sharpe.
Frederiksen, P.C. (1991) Economic growth and defense spending: Evidence on causality for selected Asian countries. Journal of Philippine Development 18(1), 131-147.
Frederiksen, P.C. and LaCivita, C.J. (1987) Defense spending and economic growth: Time series evidence on causality for the Philippines, 1956-1982. Journal of Philippine Development 14(2), 354-360.
Granger, C.W.J. and Newbold, P. (1974) Spurious regressions in econometrics. Journal of Econometrics 2, 111-120.
Grobar, L. and Porter, R. (1989) Benoit revisited: Defense spending and economic growth in less developed countries. Journal of Conflict Resolution 33, 318-345.
Im, K., Pesaran, M.H., and Shin, Y. (1997) Testing for unit roots in heterogenous panels. Working Paper No. 9526, Department of Applied Economics, University of Cambridge.
Joerding, W. (1986) Economic growth and defense spending: Granger causality. Journal of Development Economics 21, 35-40.
Johansen, S. (1988) Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control 12, 511-526.
Karagol. E. and Palaz, S. (2004) Does defence expenditure deter economic growth in Turkey? A cointegration analysis. Defense and Peace Economics 15(3), 289-298.
Khilji, N.M. and Mahmood, A. (1997) Military expenditure and economic growth in Pakistan. The Pakistan Development Review 36(411), 791-808.
Kollias, C., Manolas, G. and Paleologou, S.M. (2004) Defence expenditure and economic growth in the European Union: A causality analysis. Journal of Policy Modeling 26, 553-569.
Kusi, N. (1994) Economic growth and defense spending in developing countries. Journal of Conflict Resolution 38(1), 152-159.
LaCivita, C. and Frederiksen, P.C. (1991) Defense spending and economic growth: An alternative approach to the causality issue. Journal of Development Economics 35, 117-126.
Lai, C.N., Huang, B.N. and Yang, C.W. (2005) Defense spending and economic growth across the Taiwan Straits: A threshold regression model. Defense and Peace Economics 16(1), 2005.
Larsson, R., Lyhagen, J. and Lothgren, M. (2001) Likelihood-based cointegration tests in heterogenous panels. Econometrics Journal 4, 109-142.
Levin, A., Lin, C.F., and Chu, C.S.J. (2002) Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics 108, 1-25.
Maddala, G.S., and Wu, S. (1999) A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics 61, 631-652.
Pesaran, M., Shin, H. and Smith, R. (1999) Pooled mean group estimation of dynamics heterogenous panels. Journal of the American Statistical Association 94, 621-634.
Rahman, S. (2000) Defense spending in post-liberation Bangladesh: Determinants and implications. Contemporary South Asia 9(1), 57-75.