Document Type : Original Article
Authors
1
Ph.D. Candidate, Department of Economics, Faculty of Human sciences, Islamic Azad University, Miyaneh Branch, East Azerbaijan, Iran.
2
Associate professor, Department of Economics, Faculty of Management, Economics and Accounting, Islamic Azad University, Tabriz branch, East Azerbaijan, Iran.
3
Assistant professor, Department of Economics, Faculty of Human sciences, Islamic Azad University, Miyaneh Branch, East Azerbaijan, Iran.
Abstract
The military industry sector is very important because of its strategic nature and the vital role it plays in creating the security of countries. This industry affects different sectors through different channels on the economic position of countries and their economic growth. Hence, the main goal of the current research is to investigate the role of military industries in different regimes of economic growth in Iran with using data from 1970 to 2021 and applying Markov regime switching models.
The results of the research indicate that in an optimal model consisting of two regimes with low economic growth (regime zero) and high economic growth (regime one), the production of military industries has a positive effect on economic growth in Iran, but this effect is significant only in regime one. Moreover, foreign direct investment and export also affect the growth process only in the periods when the economic growth is higher, but education in both regimes has a positive effect on economic growth. Finally, the government size in both regimes and the inflation rate only in the regime one weakens economic growth. In addition, the findings of the research indicate that the probability of staying in the regime with low economic growth in the coming periods is higher than the regime with higher economic growth.
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