Defense Expenditures Research Articles

Beyond the defence and development debate: A framework for analysis of Indian defence expenditure

Beyond the defence and development debate: A framework for analysis of Indian defence expenditure

BUSINESS OR POLITICS: EXPLORING THE DETERMINANTS OF POLICY MIX IN SOUTH ASIA

This study explores the determinants of policy mix in South Asia from 2000 to 2022, by using panel least squares and fixed/random effect models. We have used defense spending, health and education expenditures, corruption levels, and financial development, whereas policy mix, monetary freedom and fiscal freedom have been used as dependent variables. In South Asian nations, defense spending have statistically insignificant and adverse affect on policy mix. Conversely, higher investments in health and education show a notable positive impact on the policy mix, contributing to overall well-being and economic stability. Corruption levels and financial development do not significantly correlate with the policy mix. Our study also uncovers distinct relationships between these independent variables and fiscal and monetary freedom. Defense expenditures negatively affect fiscal freedom, while health and education spending plays a positive role. A well-educated and healthy workforce significantly enhances fiscal freedom. Corruption levels have no significant linear relationship with fiscal freedom, but financial development creates a trade-off between financial stability and fiscal freedom. Interestingly, defense expenditures positively affect monetary freedom, highlighting their role in creating a secure environment for investments. Education spending also positively impacts monetary freedom. Corruption levels do not significantly correlate with monetary freedom, but financial development negatively affects it, indicating a trade-off between financial development and monetary freedom. To enhance policy mix and economic and monetary stability in South Asia, we recommend strategically allocating more resources to the health and education sectors. Careful assessment and possible reallocation of defense budgets can reduce the fiscal burden and promote efficient resource utilization. Balancing defense spending with economic priorities can maximize its positive impact on monetary freedom, stimulating economic growth in the region.

Exploring the Nexus of Defense Expenditure, Governance Strategies, and Ecological Impact: An Evidence from Developed Countries

Exploring the Nexus of Defense Expenditure, Governance Strategies, and Ecological Impact: An Evidence from Developed Countries

The Relationship of Geopolitical Risks and Defense Expenditures with Economic Growth: The Example of MIST Countries

Savunma harcamalarının GSYH içindeki payının yüksek oluşu bazı ekonomilerde büyüme üzerinde olumsuz bir etki yaratmaktadır. Arz yönlü iktisatçılar bu etkinin, kaynakların daha verimli ve üretime dönük alanlarda değerlendirilmesiyle giderilebileceğini savunmaktadır. Keynesyen görüş ise askeri harcamaların çarpan mekanizması yoluyla iktisadi büyümeyi pozitif etkileyebileceğini öne sürmektedir. Bu argüman, artan savunma harcamalarının toplam harcamaları artıracağını, toplam harcamaların da toplam talebi artıracağını ve böylece iktisadi büyümenin ivme kazanacağı anlayışına dayanmaktadır. Savunma harcamaları sürekli yüksek seyreden ülkelerde bu duruma sebebiyet veren faktörler arasında savaş, deprem ve göçmen sorunları gibi jeopolitik riskler de gösterilebilir. Bu riskleri yüksek olan ülkelerin savunma harcamalarının da GSYH içinde görece önemli bir paya sahip olduğu gözlenebilmektedir. Ekonomi yazınında savunma harcamaları ve ekonomik büyüme ilişkisi üzerine geniş bir literatür mevcut iken jeopolitik risklerin bu denkleme dahil olduğu çalışmalar az sayıdadır. Bu çalışma jeopolitik riskler ve savunma harcamalarının iktisadi büyüme ile nedensellik bağının varlığını MIST ülkeleri (Meksika, Endonezya, Güney Kore ve Türkiye) kapsamında tahmin etmeyi amaçlamaktadır. Çalışma kapsamında jeopolitik risklerin ölçümü için GPR endeksi (Caldara & Lacoviello, 2022) kullanılarak Dumitrescu & Hurlin (2012) panel nedensellik testine başvurulmuştur. Sonuçlar büyümeden her iki değişkene doğru geri beslemeli nedenselliğe dair kanıtlar sunarken jeopolitik riskten savunma harcamalarına doğru bir nedenselliğe de işaret etmektedir.

The value of information disclosure: Evidence from mask consumption in China

We study the effect of information provision on defensive expenditures, using China’s roll-out of air pollution information as a quasi-natural experiment. With a unique dataset of high-frequency mask purchase transactions, our difference-in-differences estimates show that the provision of air pollution information increases expenditures on PM2.5 respirators by 32%, which is mainly driven by improved information quality and the addition of PM2.5 index. The effect is enhanced by increased attention to pollution alerts and it is more pronounced during heavily polluted days. Our results shed light on the benefits of information provision through inducing defensive expenditures to reduce air pollution exposure.

Security in the Context of Sustainability: The Implications on Defence Expenditures

Abstract This scientific article aims to assess the link between defence expenditures and sustainable development in Romania. As the world faces increasingly complex security challenges and environmental concerns, it becomes crucial to examine the interplay between defence investments and sustainable development goals. The study focuses specifically on Romania, a country that has been undergoing significant economic and political transformations since joining the European Union. The analysis employs a comprehensive framework that integrates economic, social, and environmental indicators to evaluate the sustainability implications of defence expenditures. Using data from various sources, including national statistics and international databases, this study examines the trends in defence spending in Romania over a specified period. The research investigates the potential trade-offs between defence investments and sustainable development outcomes by considering key dimensions such as economic growth, social well-being, and environmental impact. By examining the case of Romania, valuable insights can be gained regarding the challenges and opportunities in balancing defence expenditures with sustainable development priorities. The study not only provides a comprehensive analysis of the current situation but also identifies potential pathways for enhancing the sustainability of Romania’s defence sector. This study contributes to the broader discourse on sustainable security fostering a more resilient and sustainable future.

Canada and the NORAD: Economics and Burden Sharing

ABSTRACT We quantify the burden sharing between the United States and Canada within the context of the bi-lateral defense relationship regarding the North American Aerospace. Also known as the North American Aerospace Defense Command (NORAD), this bi-lateral military alliance has existed since the late 1950s. We use insights from the economic theory of military alliances as well as disaggregated defense expenditures on capital, labor and R&D to tease out nuanced assessment of burden sharing between the two countries and peer groups (Arctic Council). In addition, we provide some funding scenarios for the planned policy review in Canada to guide decision makers. We also show that there are considerable strategic, institutional, and operational constraints facing the fulfilment of Strong, Secure, Engaged (Defence Policy) and possible NORAD modernization. Improving these institutional issues, along with fulfilling the commitments outlined in the Defence Policy, will go a long way to assuaging the burden sharing debate.

The Evolution of The Military Personnel in The Nato Member States

Based at the latest NATO annual report (NATO, 2022) this article examines the number of military personnel in the NATO (North Atlantic Treaty Organization) member states between 2014 and 2022. These two years are taken as a result of the NATO decisions at the Wales summit in 2014 to increase the defence expenditures against 2024 to 2 % of the national GDP in every member and also to invest at least 20 % of the national military budget in new material for the different army parts.

EVALUATION OF NATIONAL DEFENSE FROM AN ECONOMIC PERSPECTIVE

Measuring the defense product (or national defense as a public good) is a necessary step in determining the efficient use of public funds in the defense sector. In this paper, the final product obtained by the military field is analyzed from a macroeconomic perspective. The defense sector absorbs a substantial part of the state s resources, limited resources that could have multiple alternatives uses for society (education, health, infrastructure, etc.). While defense expenditure (considered as input or consumption of resources) is known for each state, for now there is no internationally established standard indicator of the defense product (benefit) obtained. This is in contrast to how performance is evaluated in the private sector economy. In the field of defence, the solution proposed by economists for measuring "defense output" assumes that defense output equals "resource inputs" (a convention widely used in the public sector) or that the value of defense output equals be roughly equal to the expenses incurred to achieve that result. Measuring the value of production in the free market economy is not viewed as a matter of policy. Market economies solve this problem through the method of market prices, and the supply-demand mechanism, which actually reflects the options existing between a certain number of buyers and sellers. However, in the field of defense things differ from the private markets model, which leads to an understanding of the challenge in measuring and evaluating the defense product. Economic theory provides some guidelines for determining the optimal outcome of the defense product. Analyzing these aspects from the perspective of an optimization problem, it is necessary to identify the socially desired level of defense, and to track the resulting (achieved) level of defense. This is done by equating the additional or marginal costs of the proposed defense spending with the additional or marginal benefits obtained. Although the economic approach is difficult to translate into a set of clear policy guidelines, it nevertheless provides a framework for designing defense performance assessment.

Strengthening the Military Potential of the Bucharest Nine States in the Context of the russian-Ukrainian War.

The article focuses on strengthening the military potential of the Bucharest Nine (B9) states in the context of the russia's war in Ukraine. The authors clarify the reasons and goals of the consolidation of the countries of Central and Eastern Europe for cooperation within the framework of the Bucharest format. Prerequisites for changes in defense spending within NATO are described, namely, the russian-Ukrainian war. The reaction of the North Atlantic Alliance to Russia's armed attack on Ukraine is studied, in particular after the full-scale russian invasion. The main results of the NATO summit in Madrid, which took place in 2022, are considered, separately, the adoption of the new Strategic Concept of NATO. The features of the new security and defense model presented by J. Stoltenberg, which includes the protection of the Eastern flank of the Alliance and is based on three key pillars, are pointed, namely: 1) increased forward presence with more combat operations; 2) pre-deployment of military equipment to save time in conditions where mobilization of forces is required; 3) preliminary definition of units - these are forces that will undergo training in a certain territory, where they will have certain duties. The dynamics of defense expenditures of each of the participating countries of the Bucharest Nine format from the beginning of the russian-Ukrainian war in 2014 to the period after the open armed attack on Ukraine on February 24, 2022 is presented. The information on the formation of the newest high-reaction combat groups of the North Atlantic Alliance and their location on the territory of the B9 member states to strengthen the military presence in countries that are at risk in the event of further escalation of the Russian-Ukrainian war is covered. The data related to NATO military exercises within the framework of strengthening the eastern borders in connection with the intensification of the armed aggression of the russian federation are analyzed. As a result of the study, it is concluded that russian aggression against Ukraine is considered by the member states of the Alliance to be a colossal threat to the existence of peace and security in the Euro-Atlantic region. The authors predict a further increase in the military potential of the Bucharest Nine countries to maintain a stable security situation in the subregion.

Do Reforms in Indonesia Affect Economic Growth? Learn Ten Years from 1999-2008 Period

Indonesia had observed a drastic drop in its economic growth in 1998 after the monetary crisis in mid-1997 but grew back slowly starting in 1999. Since then, the Indonesian economy has been moving slowly with low growth. From this phenomenon, this study aims to see which sectors positively influence economic growth. This research uses a quantitative method in which a model of economic growth is built as a linear regression model in a time series. The economic growth model is formed based on the neoclassical production function approach from the supply side. The economic reforms in Indonesia significantly impacted economic growth, although they had a negative effect in the first ten years. Investment growth and defense spending have a positive influence on national economic growth. Meanwhile, non-defense budget growth did not affect economic growth during the ten years before and after the reform. From these results, the best way to increase Indonesia’s economic growth is to create an atmosphere that encourages both foreign and domestic investors who want to invest in Indonesia with conditions that are conducive for investors.
 Keywords: economic growth, economic reforms, investment, government budget, defense expenditure

The Sustainable Relationship between Investments in Human Capital and M&A

The purpose of this study is to investigate the sustainable relationship between government investment in human capital and the number of mergers and acquisitions (M&A). The analysis is carried out on EU countries grouped into emerging countries, frontier countries and developed countries, considering the FTSE Russell ranking. Specifically, the research looks at the impact of a range of social factors: government expenditure on recreation programmes, community events, festivals (RCR), expenditure on housing and community facilities (HCA), expenditure on schools and universities (EDUC), expenditure on hospitals and general practitioners (HLT), expenditure on social protection (SP) and public order and safety (POS), defence expenditure (DEF) and environmental protection expenditure (EP) on the volume of merger or acquisition operations. Following the study carried out with the help of the panel data methodology and the OLS (ordinary least squares) method, we concluded that a business environment characterized by sustainable government investments in culture and education is more likely to contribute to business success and to attract more foreign investors, including those resorting to mergers or acquisitions. The results of the study could help identify the group of countries that require more attention from governments in terms of spending allocated from GDP for a sustainable human capital environment. Also, entrepreneurs can discover sustainable countries where they can make foreign direct investments with a favourable impact on the performance of the target companies.

Defense investment and economy: a study on the causality relationship

The effect of defense expenditure on economic growth is the subject of many debates. This study investigates the relationship between defense expenditure and economic growth applying Granger causality test. To do this, data of military expenditure, gross domestic product, and gross capital formation from six countries are analyzed. They are: Brazil, China, United States of America, France, United Kingdom and Russia. The findings of the study indicate Granger causality relationship for some of these countries.

Theoretical foundations and practice of the actions of governments and central banks in the conditions of war: historical excursion and Ukrainian experience

The object of research is the current global experience of regulating the financial sector and financing the costs of military actions of countries that were at war. This experience is compared in the work with those measures that were used by the government of Ukraine during the russian-Ukrainian war. In the conditions of war, the problem of financing war expenditures and balancing the budget for uninterrupted implementation of social payments is particularly acute. A sharp imbalance of the country's budget in the direction of financing military expenses and a drop in GDP, as a result of military operations on the territory of the country where military aggression is taking place, requires adequate actions of both regulatory and investment nature from the government and regulators. The timeliness and adequacy of such actions is a practical and scientific dilemma, the solution of which lies partly in the world's historical experience. The work proves that the actions of the Ukrainian government and the National Bank of Ukraine during the active phase of military aggression on the part of russia fully correspond to modern theoretical and methodological achievements in the organization of financing the defense expenditures of belligerent countries. Ukraine is using almost the entire arsenal of possible financing options: reducing non-military spending, increasing government borrowing, and issuing money. The study of the role of expenditures to fill the budget demonstrated the reduction of the role of taxes as a lever for financing the growing expenditures of states on defense. Coordinated actions of the Government of Ukraine and the National Bank of Ukraine prevented a sharp outflow of foreign capital from the country and preserved the purchasing power of the national currency. This is explained by the timely application of historical experience, tools of the classic Lucas-Stokey model with skillful manipulation of government debt rates in order to interest investors in long-term investment in government debt securities, and unprecedented financial assistance from foreign partners.

Актуальні питання правового регулювання фінансових відносин в умовах воєнного стану в Україні

The article clarifies the issue of legal regulation of financial relations during martial law in Ukraine. Changes in the powers of the Cabinet of Ministers of Ukraine, the Minister of Finance of Ukraine, the State Treasury Service of Ukraine, the National Bank of Ukraine, the Supreme Commander-in-Chief of the Armed Forces of Ukraine, military administrations, and local bodies during this period were considered. It is justified that the purpose of making changes to the budget legislation is primarily to ensure: priority financing of security and defense expenditures, their increase and redistribution between budgets; formation of the reserve fund of the State Budget of Ukraine; treasury service of funds of local budgets of settlements located in territories where martial law has been imposed, and managers (recipients) of budget funds who may be in settlements in temporarily uncontrolled territory. It is concluded that changes in the legal regulation of banking and currency relations contributed to: ensuring the convenience, speed and availability of financial services; the creation of the Power Banking network and the introduction of ATM national roaming for uninterrupted operation of the banking system, including in blackout conditions; weakening of the negative impact of uncontrolled devaluation, deficit of foreign exchange receipts on the foreign exchange market; ensuring exchange rate stability of the hryvnia; maintaining the stability of the banking system of Ukraine during this period.

An Economic Analysis on the Use of Resources Allocated for Defense: An Empirical Study on Turkey

In this study, the relationship between Turkey's defense expenditures and the independent variables selected as gross domestic product, foreign debt, and unemployment, in a 33-year period between 1998 and 2020, were examined using the Toda-Yamamoto causality test. According to the findings, it has been observed that there is causality from defense expenditures to gross domestic product, that is, the change in defense expenditures affects gross domestic product. Similarly, causality has been determined from defense expenditures to external debt. Therefore, it is possible to state that the change in defense expenditures will have an impact on foreign debt. In this respect, the findings are in agreement with the literature. The increase in defense expenditures will increase the production of the defense industry, the export of this production will result in a resource inflow to the country and the gross domestic product will increase. On the other hand, in some countries, defense expenditures will be financed by debt from foreign sources, which will increase foreign debt.

European Defence Policy: Prospects and Challenges

ABSTRACT European defence policy offers opportunities for spending more and better where better achieves more from existing resources. Increased defence spending needs to be justified by the threats to Europe which have to be identified and defined. Higher defence expenditure usually focuses on inputs rather than final outputs in the form of greater peace, protection, security and the safety of a nation’s citizens. The task is to show the opportunities for applying economic analysis to the complexities of European defence policy and collaborative defence projects. Economic efficiency criteria identify the contribution of final outputs, substitution and competition to the formulation of European defence policy, but the final outcomes are likely to be determined by military-political factors rather than economic efficiency criteria. The paper provides a critique of European defence policy.

Integrating hydrogeological and economic analyses of groundwater flooding in an urban aquifer: the plain of Naples (Italy) as a case study

ABSTRACT The study applies the defensive expenditure approach via hydrogeological data for a sector of the plain of Naples to value the economic damages produced by groundwater flooding on private properties. It follows from the integrated analysis that the value of the economic damages is increasing over time at a compound pace. The over-pumping of groundwater during the industrialisation period, and its stop in the subsequent de-industrialisation one, impaired the long-run natural equilibrium of the groundwater resources. Thus, the myopic decisions taken with respect to land and groundwater use, and a short-sight urban design planning have caused increasing economic costs in the medium and long terms.

Epochal turns: Uncomfortable insights, uncertain outlooks

AbstractThe perfect storm of converging political, security, environmental and social crises enforces an epochal turn. Necessarily increasing defensive expenditures for health and climate damage compensation combine with climate adaptation and increased security spending to drive already sluggish economic growth rates into negative territory. The result will by accelerating degrowth, an end to just‐in‐time production concepts, higher resource cost, new dependencies on metal exporters (some of them as nasty as Putin's Russia), and decreasing median incomes. Without significant U‐turns on tax and distribution policies, funds will be lacking to address the challenges. Rather than promising easy ways out of the crises, stopping the drivers, focussing on well‐being instead of growth, and exploring ways to a dignified life within the crises need to be political priorities.

Relationship between Defense Expenditure and Economic Growth in Nepal

This research study investigates the impact of defense expenditure (DE) and export on Real Gross Domestic Product (RGDP) of Nepal. The RGDP is the dependent variable and defense expenditure and export are the independent variables. Data since 1974 to 2020 are taken from secondary sources of Nepal Rastra Bank, ministry of finance to find the relationship between them. Augmented Dickey- Fuller Test is run to test stationary condition in the variables. The Vector Error Correction Method (VECM) coefficient is significant and positive. There is no evidence that economic growth and the independent variables have a long-run relationship but there is short-run causality running from DE to RGDP and export to RGDP.The result of Granger Causality Test shows there exists unidirectional relationship between RGDP and DE. Similarly, there exists unidirectional relationship between RGDP and export but there is no relationship between DE and Export. Results confirm the variables are the determinants of economic growth in Nepal. So policy makers should consider on these variables for economic growth of the country.