Defense spending and economic development in lebanon : a co-integrated and vector autoregression analysis

Abstract EN

The lack of statistical data on Lebanon, especially before the 1990s, limited the amount of empirical work on this country.

Unlike standard defense - growth literature that focuses mainly on total military expenditures, this study attempts to underscore the human resources' aspect of defense spending in Lebanon as measured by the armed personnel.

It also examines the temporal causality between defense spending (i.e.

total defense resources) and economic development, and between armed personnel (i.e.

human defense resources) and economic development.

Results show that total defense resources, and perhaps more interestingly, human defense resources, retard Lebanon's economic development significantly.

Findings also reveal that diverting human resources, relative to total resources including physical, away from the private sector may be at least three times more distorting than diverting physical resources (e.g., land, building, and materials)