Abstract
A sound national defence is extremely essential for a country’s sovereignty. The geostrategic position of Pakistan and its deterrence policy against neighbouring India have generally been the reasons for stringent military financing. Defence spending affects all sectors of the economy directly or indirectly. This study aims to investigate the influence of government military expenditures on the economic growth of Pakistan over the period 1987-2016. Augmented Dickey-Fuller test has been used for checking the unit root in the data. Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration has been applied to analyze the relationship between military spending and economic growth. The findings indicate that military expenditure has a positive impact on Pakistan's economic growth in the long-run, however it has negative effect on economic growth in the short-run.
Highlights
A sound national defence is extremely essential for a country’s sovereignty
The findings indicate that military expenditure has a positive impact on Pakistan's economic growth in the long-run, it has negative effect on economic growth in the short-run
The general government expenditure variable is become stationary at the 1st difference at the 10 percent significance level, while military expenditure variable is stationary at first difference while variable real rate of interest is stationary at level
Summary
A sound national defence is extremely essential for a country’s sovereignty. All countries around the world defend their boundaries and control internal riots by keeping forces such as navy, air force, and the army. All citizens get benefits from the defence services of forces. Likewise, these citizens bear the entire expenses of the troops which are called military expenditures. Most studies have shown that military spending is positively linked to the economic growth of less developed countries (Augier et al, 2015). Benoit (1973) used cross-sectional data for 44 less-developed countries and found a positive and significant association between military spending and economic growth Most studies have shown that military spending is positively linked to the economic growth of less developed countries (Augier et al, 2015). Benoit (1973) used cross-sectional data for 44 less-developed countries and found a positive and significant association between military spending and economic growth
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