The impact of military expenditure on economic growth in developing countries : mena case

Abstract EN

This paper examines one of the puzzling results of economic growth literature, i.e.

the impact of military expenditures is frequently found to be non-significant or negative and sometimes positive, yet most countries spend a large fraction of their gross domestic product on military.

The objective of this paper is to investigate the impact of military expenditure on the economic growth in 11 developing countries from the Middle East and North African Region (MENA) using time series data for 45 years (1960-2005).

Multivariate cointegration and variance decomposition techniques were used to investigate this relationship.

Conflicting results were found showing a negative relationship between these two variables in some countries, and a positive one in others.

These results are associated with conflicting views in existing theoretical literature.

This ambiguity, emerging from the empirical and theoretical sides, does not help to draw a general conclusion on how military expenditure affects economic growth.