Externalities in Military Spending and Growth: The Role of Natural Resources as a Channel through Conflict

Musayev, Vusal (2013): Externalities in Military Spending and Growth: The Role of Natural Resources as a Channel through Conflict.

Abstract

This analysis re-examines the relationship between military spending and economic growth using recent advances in panel estimation methods and a large panel dataset. The investigation is able to reproduce many of results of the existing literature and to provide a new analysis on the relationship between conflict, corruption, natural resources and military expenditure and their direct and indirect effects on economic growth. The analysis finds that the impact of military expenditure on growth is generally negative as in the literature, but that it is not significantly detrimental for countries facing either higher internal or external threats and for countries with large natural resource wealth once corruption levels are accounted for.

• Item Type: MPRA Paper
• Language: English
• Keywords: Military expenditure; Economic Growth; Conflict; Natural Resources, Corruption
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H56 - National Security and War; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q34 - Natural Resources and Domestic and International Conflicts

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