The Demand for Military Spending in Egypt

Yasmine M Abdelfattah,Aamer S Abu-Qarn,J Paul Dunne,Shadwa Zaher

doi:10.1080/10242694.2013.763454

Abstract

Egypt plays a pivotal role in the security of the Middle East as the doorway to Europe and its military expenditure reflects its involvement in the machinations of such an unstable region, showing considerable variation over the last 40 years. These characteristics make it a particularly interesting case study of the determinants of military spending. This paper specifies and estimates an econometric model of the Egyptian demand for military spending, taking into account important strategic and political factors. Both economic and strategic factors are found to play a role in determining military burden/spending, with clear positive effects of lagged military burden, suggesting some sort of institutional inertia, plus negative output and net exports effects. The strategic effect as a result of the impact of Israel’s military burden is mostly positive and significant, though its impact is reduced when the impact of important strategic events are taken into account. The military spending of Egypt’s allies Jordan and Syria generally seems to have had no effect on Egypt’s spending. These results are consistent over a range of econometric techniques.

Highlights

Egypt plays a pivotal role in the security of the Middle East as the doorway to Europe
Most theoretical models lead to similar estimation equations for the empirical analysis, where the demand for military expenditure is a function of economic resources, threats to security, and political factors, such as the nature of the state
The results of the regression with variables deletion that are portrayed in Table 3 suggest that military burden in Egypt is mainly determined by an auto regressive (AR) process, with some important economic and strategic factors

Summary

Introduction

The Israeli front remained quiet after the signing of the peace treaty, Egypt security concerns continued and military spending increased a little to secure both internal and external borders (Cordesman, 2004). Studies focusing on a range of economic, political and strategic determinants of military spending, with the most satisfactory empirical analyses tending to take a relatively comprehensive approach.

Results

Conclusion