The economic impact of arms spending in Germany, Italy, and Spain

Stamegna, Marco and Bonaiuti, Chiara and Maranzano, Paolo and Pianta, Mario (2024): The economic impact of arms spending in Germany, Italy, and Spain.

Abstract

In the last ten years, military expenditures of NATO EU countries (according to NATO definitions and data) have increased by almost 50%, from €145 billion in 2014 to a budget forecast of €215 billion in 2023 (measured in constant 2015 prices). In this context, it is important to assess the economic consequences that the current increase in military spending is likely to have on Europe’s economies. We focus on Germany, Italy and Spain, and we concentrate on arms acquisitions. The article investigates the economic effect of military expenditure on growth and employment and compares it to the impact that could emerge from a similar expenditure for education, health and the environment. We use an input-output methodology – already adopted by several studies - to assess the relevance of imports and of demand towards different sectors providing intermediate inputs. We assess the likely impact on output and jobs of one billion euros of extra spending in arms, and compare it to the outcomes of the same amount spent in education, health and the environment. Our findings show that for all countries non-military public expenditures have a greater impact on the economy and employment than spending for arms acquisition.

• Item Type: MPRA Paper
• Language: English
• Keywords: Military expenditure; arms acquisition; input-output; economic impact; military jobs
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C67 - Input-Output Models; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D57 - Input-Output Tables and Analysis; H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; H - Public Economics > H5 - National Government Expenditures and Related Policies > H56 - National Security and War; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q50 - General

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