Relationship Between Military Expenditure, Economic Growth, and Social Expenditure in India, China, and Bangladesh

Abstract

One of the most debated phenomena of recent times in the global scenario is whether there really exists a true opportunity cost of a sequential increase in global military expenditure across the world. The existing literature on the relationship between military expenditure and economic growth confirms that three kinds of linkages may be plausible: positive, negative, and no significant linkages. The chapter focuses on contradictions and conflicts between military expenditure and social expenditure such as health and education. The chapter also attempts to examine both the long-run and short-run relationship between defense expenditure (DE), health expenditure (HE), educational expenditure (EE), and economic growth (changes in GDP). Here the autoregressive distributed lag approach (ARDL) and error correction model (ECM) technique have been applied to examine the long- and short-run causality among the variables. The study observes that there exists no significant long-term relationship between economic growth, defense expenditure, health expenditure, and educational expenditure in India and China, but Bangladesh does have one.