Military Spending Research Articles

Determinants of Inflation in Pakistan: A Comprehensive Analysis of Macroeconomic Variables (1991–2022)

This research paper investigates the determinants of inflation in Pakistan from 1991 to 2022, focusing on key macroeconomic variables such as imports, GDP growth rate, GDP per capita, military expenditure, population growth, total debt service, and unemployment. The main objective is to analyse the impact of these variables on inflation and provide policymakers with actionable insights. Utilizing annual time series data from reliable source World Bank WDI, the study employs descriptive statistics, correlation analysis, ADF unit root tests, regression analysis, and the Autoregressive Distributed Lag (ARDL) model. The findings reveal significant interdependencies among the examined variables. The correlation analysis shows strong positive relationships between inflation and imports and military expenditure, while GDP per capita and population growth negatively correlate with inflation. OLS results confirm that imports, GDP growth, and total debt service significantly raise inflation, whereas GDP per capita, military expenditure, and population reduce inflation. The ARDL model reveals that, in the long run, imports, GDP growth, and debt service positively affect inflation, while GDP per capita, population growth, and unemployment exert downward pressure. Short-run dynamics indicate that inflation quickly adjusts to economic shocks, with imports and GDP growth having an immediate impact. These findings highlight the importance of managing imports and debt, while promoting economic growth to maintain price stability. The policy implications emphasize the need for targeted monetary policies to manage imports and optimize debt service strategies, as well as policies aimed at enhancing economic growth and increasing per capita income. Effective debt management and strategic military spending are also vital for maintaining price stability. Despite its comprehensive analysis, the study identifies gaps such as the need for further exploration of structural breaks and non-linear effects in inflation dynamics, and the impact of external factors like global oil prices. The significance of this research lies in its contribution to understanding the complex economic interactions influencing inflation in Pakistan, providing a crucial resource for policymakers to develop effective strategies for economic stability in developing economies.

RUSSIA’S EMBRACE OF ATTRITIONAL WARFARE: "WINNING BY NOT LOSING"

Abstract: This paper argues that once President Putin was no longer able to achieve his initial objectives of regime change in Kyiv in 2022 by using blitzkrieg operations, Russia’s grand strategy underwent a reassessment towards narrower strategic objectives. This paper will provide an account of the changing nature of Russia’s strategic aims and goals, as well as exploring the ‘Russian’ way of warfare. The shift in war aims is evident in the partial mobilisation of fresh troops, the annexation of Ukrainian territory and waging of a war of attrition. Russia has increased its military budget, the manufacturing of weaponry, as well as the import of military technology from Iran and North Korea. However, NATO allies, including Romania, have provided military aid to Kyiv to continue fighting. Taking all these factors into account, this paper argues this conflict has become a ‘long war’ of attrition.

Effectiveness of military spending in reducing the intensity of armed conflict in Sub-Saharan Africa

Abstract This study empirically examines the effectiveness of military spending in reducing the intensity of armed conflict in Sub-Saharan Africa. We use a dynamic probit model, and the results show that military spending reduces the intensity of conflict. It significantly reduces low-intensity conflicts more than high-intensity conflicts. Additionally, the effectiveness of military spending depends on its level and the quality of institutions. Finally, the analysis of transmission channels shows that military spending affects conflict intensity mainly through the channel of military capabilities. We conducted several tests and robustness checks to ensure the validity of our results.

Dynamics of Sino-American relations: A decade-long analysis using topic modeling

Abstract. This study explores the thematic evolution of Sino-American relations over the past decade using Latent Dirichlet Allocation (LDA) topic modeling. We compiled a comprehensive dataset of academic papers, news articles, government reports, and social media posts, focusing on themes such as economic competition, technological rivalry, military strategy, diplomatic maneuvers, and ideological conflict. Our analysis identifies key sub-topics within these themes, including trade tariffs, 5G technology, and military expenditures, providing a nuanced understanding of the factors influencing bilateral relations. Temporal trends highlight the shifting prominence of these themes, with economic competition and technological rivalry becoming increasingly salient. Additionally, the concept of financial hegemony, particularly the role of the U.S. dollar, emerges as a significant driver of U.S. policy. This study offers insights into the strategic motivations behind U.S. actions and the complex interplay of various factors in Sino-American relations.

The Impact of Military Expenditures on the Indebtedness of the Czech Republic and Lithuania

The Impact of Military Expenditures on the Indebtedness of the Czech Republic and Lithuania

The new arms race: analyzing Sino-US geo-strategic dynamics and implications for global security

ABSTRACT The term ‘Arms Race’ describes the Cold War’s intricate geostrategic landscape, wherein the United States and Soviet Union were the principal contenders. The New Arms Race, in which China and the USA are major players, demonstrates the shifting dynamics of the global geostrategic landscape and symbolizes the current global geostrategic environment. This study, therefore, investigates the intricacies of the emerging Sino-U.S. arms race and how Xi Jinping's foreign policy and the Chinese dream of national rejuvenation influence China's military modernization. Considering China's recent military modernization, how has the US adapted its military modernization and strategic outlook to contain China? Furthermore, this study assesses President Trump's and Biden's diverse strategic outlooks in their approaches to China's military advancement and the geopolitical implications of the Sino-US Arms Race for global security and strategic stability. Moreover, this study highlights that a new bipolar world order analogous to the Cold War is emerging. The escalating New Arms Race will not only alter the regional balance of power but also encourage higher defense spending and strategic partnerships among like-minded nations, with consequences for the global arms control architecture.

Factors of military Keynesianism in modern economic policy in Russia

Historical aspects, general economic logic and theoretical discussions around military Keynesianism as a policy of stimulating the economy through increased government allocations for defense items are considered. A brief overview of empirical studies on the economic results of military spending is presented. In relation to the period 2022—2024 in the Russian economy, the size of the fiscal impulse due to defense budget items, its positive and negative effects are analyzed. The secondary nature and low controllability of economic effects of defense policy are emphasized. Among the factors hindering the success of military Keynesianism in modern Russia, limited spare capacity and labor are noted, which generate inflationary consequences, as well as the contradiction between tightening monetary conditions and continued fiscal stimulus. The conclusion is made about the predominance and possible aggravation of negative consequences of the expansion of financing through military spending

Does War Make States? Military Spending and the Italian State‐Building, 1861–1945

ABSTRACTWe present empirical evidence on the relationship between military spending and the expansion of other government budget items and tax revenues from the unification of Italy (1861) up to the end of World War II. Until 1922, investments in education and social transfers to families mainly moved in step with defence spending. This means that increases in defence spending imply an increase in both education spending and transfers. Moreover, transfers also play a compensatory role during recessions. Increases in defence spending do not crowd out investment in capital expenditure, while disinvestment in defence is associated with an increase in investment in capital. The pro‐cyclical behaviour of tax revenues is compatible with the debt‐financing dynamic of much government expenditure. Although our analytical narrative is not universally valid, it does support the persistent centrality of external wars in the discontinuous growth and expansion of central government in the Italian state, with some exceptions explained by historical events.

Setting targets: Abatement cost, vulnerability, and the agreement of NATO’s Wales Pledge on Defense Investment

Why do countries mutually agree to constraints on their behavior? Why do they comply with such constraints in the absence of enforcement mechanisms? More specifically, why did NATO allies, with disparate geography and perceptions of the international security environment, agree to ‘aim to move towards’ increased defense spending (2% of GDP on defense and 20% of defense budgets on equipment modernization) at their 2014 Wales Summit? Moreover, why have they largely complied with this agreement subsequently? We argue that the ‘Interest Based’ framework for understanding the success or failure of environmental agreements is useful for understanding the agreement and implementation of the Wales Pledge. This argument finds support from interviews with participants and a purpose-built dataset including outcomes of interest (overall defense spending and share of defense budgets allocated to equipment modernization) and key independent variables (vulnerability to security threats and ‘abatement cost’ of meeting the Wales Pledge aims). We find that vulnerability and abatement costs affected both the order in which states agreed the pledge, and the extent to which they have complied with it.

Military Expenditures and the Environment in MENA Region: The Interaction Effects of Wars and Conflicts

Military Expenditures and the Environment in MENA Region: The Interaction Effects of Wars and Conflicts

Does military spending affect inequality in South Africa? A revisit

Does military spending affect inequality in South Africa? A revisit

Long-Run Equilibrium Between Military Expenditure and GDP with Non-Linear Structural Breaks in NATO Member States

ABSTRACT This paper studies stationarity and cointegration of military expenditure and GDP for two subsamples of NATO member states. In particular, we employ newly developed unit root and cointegration tests which approximate an unknown number of smooth structural shifts in the low-frequency components of a Fourier expansion. The new unit root test indicates that military expenditure and GDP are non-stationary. Given the presence of several gradual shifts in the cointegration regression, our empirical results support the existence of stochastic comovement between military expenditure and GDP in the NATO member states. Additionally, we identified that income elasticities of the new member states are larger than those of the old member states, which implies that new member states appear to be more flexible, with their military expenditures more easily scaled up or down in accordance with economic performance.

Do budget deficits cause current account deficits? a re-evaluation utilizing military expenditures as an instrumental variable.

The twin deficit hypothesis suggests that budget deficits are crucial factors leading to current account deficits, and substantial empirical evidence documents a significant positive statistical correlation between budget and current account deficits. However, such evidence generally suffers from endogeneity problems due to reverse causality, thereby making it difficult to provide solid evidence to support policy implementation. We use extensive cross-national panel data from developed and developing countries and military expenditure as an instrumental variable to reexamine the impact of budget deficits on the current account and test the validity of the twin deficit hypothesis. Our results demonstrate that budget deficits lead to current account deficits in both developed and developing countries, supporting the twin deficit hypothesis. After considering various factors that may affect the exogeneity of military expenditures, approximating the instrumental variable as exogenous, and performing multiple robustness tests, the hypothesis still holds. This study provides solid evidence supporting the use of fiscal policies to deal with current account imbalances.

Inequality and public opinion on military spending in the United States

AbstractIn this article, I argue that increasing inequality should have an impact on public opinion which balances the impact of military spending in the United States. Using the so‐called “guns versus butter trade‐off” argument, I show that, as inequality increases between those at a lower income level and those at the upper end of income, the public may view social spending as too small and military spending as too large. In response, the public should act less favorably to expenditure on the military. An empirical test of the effect of inequality on public support (since the 1980s) of military spending, in which I employ public opinion data, confirms my expectations: widening inequality engenders a negative impact on public support for defense expenditures.

Building cybersecurity resilience: integrating defense and recovery investment strategies in an expected resilience framework

PurposeTo remain competitive in an unpredictable environment where the complexity and frequency of cybercrime are rapidly increasing, a cyber resiliency strategy is vital for business continuity. However, one of the barriers to improving cyber resilience is that security defense and accident recovery do not combine efficaciously, as embodied by emphasizing cyber security defense strategies, leaving firms ill-prepared to respond to attacks. The present study thus develops an expected resilience framework to assess cyber resilience, analyze cyber security defense and recovery investment strategies and balance security investment allocation strategies.Design/methodology/approachBased on the expected utility theory, this paper presents an expected resilience framework, including an expected investment resilience model and an expected profit resilience model that directly addresses the optimal joint investment decisions between defense and recovery. The effects of linear and nonlinear recovery functions, risk interdependence and cyber insurance on defense and recovery investment are also analyzed.FindingsAccording to the findings, increasing the defense investment coefficient reduces defense and recovery investment while increasing the expected resilience. The nonlinear recovery function requires a smaller defense investment and overall security investment than the linear one, reflecting the former’s advantages in lowering cybersecurity costs. Moreover, risk interdependence has positive externalities for boosting defense and recovery investment, meaning that the expected profit resilience model can reduce free-riding behavior in security investments. Insurance creates moral hazard for firms by lowering defensive investment, yet after purchasing insurance, expanded coverage and cost-effectiveness incentivize firms to increase defense and recovery spending, respectively.Originality/valueThe paper is innovative in its methodology as it offers an expected cyber resilience framework for integrating defense and recovery investment and their effects on security investment allocation, which is crucial for building cybersecurity resilience but receives little attention in cybersecurity economics. It also provides theoretical advances for cyber resilience assessment and optimum investment allocation in other fields, such as cyber-physical systems, power and water infrastructure – moving from a resilience triangle metric to an expected utility theory-based method.

The Economic Impact of Arms Spending in Germany, Italy, and Spain

Abstract In the last 10 years, military expenditures of NATO EU countries (according to NATO definitions and data) have increased by almost 50 %, from €145 billion in 2014 to €215 billion in 2023. In this context, it is important to assess the economic consequences that the current increase in military spending is likely to have on Europe’s economies. We focus on Germany, Italy and Spain, and we concentrate on arms acquisitions. The article investigates the economic effect of military expenditure on growth and employment and compares it to the impact that could emerge from a similar expenditure for education, health and the environment. We use an input–output methodology – already adopted by several studies – to assess the relevance of imports and of demand towards different sectors providing intermediate inputs. We assess the likely impact on output and jobs of one billion euros of extra spending in arms, and compare it to the outcomes of the same amount spent in education, health and the environment. Our findings show that for all countries non-military public expenditures have a greater impact on the economy and employment than spending for arms acquisition.

Budgeting for defense in the United Kingdom

The recent growth in international tension has been associated with countries either increasing their military spending or discussing such increases—consequently, defense budgeting has attracted increased attention. This article reviews the U.K. defense budget in an historical context. It sets out the position in mid-2024 when the newly elected Labour Government commissioned a Strategic Defence Review. It summarizes the planning process and the government’s budget constraints; considers the issues involved in measuring the defense budget and making international comparisons; reviews trends in the defense budget; and the choices that need to be made between spending on personnel, conventional equipment, and nuclear weapons.

Economic and social impacts of armed conflicts: Assessing the effects of military operations on development

The paper highlights the impact of military conflicts on society's socio-economic development. A review of scientific publications on the subject is carried out. The impact of the Russia-Ukraine military conflict on the socio-economic development of Ukraine is considered based on regression analysis. The main consequences of military operations in Ukraine are outlined. The approaches of the leading international organisations to accounting and auditing the consequences of conflicts and wars are determined. Examples are given, and the main aspects of accounting for losses caused by military conflict in different countries are compared. The study aims to comprehensively analyse and assess the impact of military conflicts on economic development and social aspects of society. Regression analysis methods were used to determine the relationship between military conflicts and economic indicators such as GDP, inflation, unemployment, public debt, defence spending, scientific data analysis, synthesis and comparison, and geospatial and comparative analysis, which helped to assess the direct and indirect effects of conflicts on economic development and the social sphere in Ukraine. The article analyses the social consequences of the military conflict in Ukraine in 2014–2024. An empirical analysis of economic losses from military conflicts is carried out. The need for an integrated approach to assessing and overcoming the consequences of wars and conflicts and coordination between government organisations, local communities and international partners to achieve sustainable development and restore the country's socio-economic situation is established.

Implementation Of Indonesia's Defence Economy Through The Defence Budget Sector

The implementation of military spending through the Indonesian defense industry has shown gradual positive development, driven by efforts to establish an independent defense sector. This study examines the role of Indonesia's defense budget in supporting national security and fostering economic growth, focusing on the collaboration between state-owned enterprises (BUMN) and private companies (BUMS). The defense budget is applied progressively to balance the country's limited resources and the relatively low level of external threats. Using a qualitative research method, this study analyzes data from relevant literature, reports, and policies to evaluate the impact of the defense budget on the Indonesian economy. The research explores key aspects such as the gradual development of defense equipment, the role of research and development (R&D) in driving innovation, and the partnership between public and private sectors to strengthen the local defense industry. The results indicate that Indonesia's defense budget has steadily increased over the past decade, contributing to economic growth, particularly in the manufacturing and technology sectors. However, the overall impact on the economy remains mixed due to challenges such as bureaucratic inefficiencies and dependence on imported materials. The discussion highlights the potential for defense R&D investments to generate spillover effects into civilian industries and recommends strategies to enhance the efficiency of defense spending. In conclusion, the implementation of defense economic policies has laid a strong foundation for the development of an independent defense industry in Indonesia. The study suggests that a gradual increase in defense spending, combined with strategic partnerships and innovation, can support both national security and economic stability in the long term

Defense Expenditure and National Well-Being: Evidence from the G7 Countries

ABSTRACT This study investigates the relationship between defense spending and societal welfare in G7 nations, focusing on health, education, and consumption expenditure as indicators of national well-being. Utilizing panel data from 1971 to 2022, we employ fixed effects to study the short-run and utilized DOLS/FMOLS econometric methods which address issues such as unobserved heterogeneity, non-stationarity, and serial correlation for long-run estimates. Incorporating a comprehensive set of control variables enhances the reliability of our analysis, our findings indicate a significant positive impact of military expenditure on health, education, and final consumption expenditure. Robustness checks confirm these results even after controlling for additional factors such as tax-to-GDP ratio, GDP per capita, trade, demographics, and historical events. Contrary to some prior studies, our findings suggest that defense spending positively influences national well-being.