Effect of military expenditure on economic growth: evidences from India Pakistan and China using cointegration and causality analysis

Mohammad Hasan Raju,Zobayer Ahmed

doi:10.1186/s40856-019-0040-6

Abstract

The study revisited the existing evidences of India Pakistan and China with updated data on the effect of military expenditure on economic growth. Econometric approaches analyzed the short and long run relationship between GDP growth and Military expenditure. Empirical studies have been done using cointegration analysis and causality test to justify the relationship and causality of the variables. Interestingly, study obtained positive log-run relation, no short run relationship and unidirectional long run causality in every cases, but for different degrees of relationship. Obtained results are robust and passed necessary diagnostic tests significantly.

Highlights

Over the past decades the study of relationship between military expenditure and Gross Domestic Products (GDP) growth has received extensive amount of attention of the researchers and policy makers around the world
The keenness of the researchers on peace economics is valid as the military expenditure is one of the major concerns for countries irrespective of its developing status
The relationship between military expenditure and GDP growth is a matter of contest in economic literature and the finding of such study vary from region to region, country to country

Summary

Introduction

Over the past decades the study of relationship between military expenditure and GDP growth has received extensive amount of attention of the researchers and policy makers around the world. This kind of attention has got more attention when different researchers obtained different result, for example (Smith and Smith 1980) argued that military expenditure protects countries from external threats and encourages foreign investment. Pulling out resources from most productive sector to ensure security could affect the annual net effect on the economy. By contrast, overlooking internal and external security to maximize net outputs of some productive sectors could make the economy’s flow unstable. An empirical investigation is needed to draw a calculation

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Results

Conclusion