Abstract
Conflict became one of the biggest problems in the Middle East region. This situation will deteriorated the country and will impact on economic perfomance, so defense budget is important to resolve these problems. This study aims to determine the effect of military budget on economic perfomance in 22 countries of the Middle East, North Africa and South Asia 2000-2014 period. This study uses 5 variables namely GDP per capita, military budget, gross capital formation, human capital and final consumption expenditure. This study uses panel data analysis with fixed effect model. The results of model estimation suggest that military budget has a significant negative effect on economic perfomance, while gross capital formation, final consumption expenditure have significant positive effect on economic perfomance. Meanwhile, human capital does not have significant effect on economic perfomance in 22 countries.
Highlights
The Middle East has been a chaotic area throughout history
The struggle for the use of rich land resources, conflicts and sectarian differences has been a major source of conflict in the Middle East as well as the threat posed by terrorist groups from different orientations
The object of this study is the relationship between military budget and economic growth in some countries MENA (Middle East and North Africa) and South Asian (SAS) (South Asia), namely Afghanistan, United Arab Emirates, Bahrain, Cyprus, Algeria, Egypt, India, Iran, Israel, Jordan, Kuwait, Lebanon, Sri Lanka, Morocco, Nepal, Oman, Pakistan, Qatar, Saudi Arabia, Sudan, Turkey and Tunisia
Summary
The struggle for the use of rich land resources, conflicts and sectarian differences has been a major source of conflict in the Middle East as well as the threat posed by terrorist groups from different orientations. This situation increases the relative need and importance of the defense budget in the face of public spending and other categories, such as education and health that have a better effect on the growth and development of a country (Künü, Hopoğlu, & Bozma, 2016). The state may make a development process as well as an evaluation of economic policy and business strategy. If the government decides a policy even on a small scale it will greatly affect the economic conditions
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