Document Type : Original Article
Authors
1
Assistant Professor, Department of Economics, Faculty of Economics and Management, Payame Noor University, Tehran, Iran.
2
Professor, Department of Economics, Faculty of Administrative Science and Economics, University of Isfahan, Isfahan, Iran.
10.22034/jdesd.2025.9713.1328
Abstract
Military expenditure can influence economic growth via both direct and indirect channels: indirectly it can help in fostering stability and reducing risks, and directly by increasing income levels through the production of military goods and services. The objective of the present study is to explore the role of military expenditure in economic growth. For this purpose, the study draws on data from 81 countries worldwide from 1998 to 2022, using a two-way mixed data method for estimation. The factors considered in the study included: military expenditure, inflation rate, trade, unemployment rate, and government size. The data for this purpose was sourced from the World Bank database, measured in millions of dollars at real 2017 prices.
The results indicate that military expenditure has a negative and statistically significant effect on economic growth, with a coefficient of -1.12. In contrast, economic growth exhibits a positive and significant relationship with trade and government size, while the relationship with unemployment rate is negative and significant. Based on these findings, the study recommends that, in the absence of regional threats, governments prioritize allocating resources to sectors such as education and healthcare. Implementing this strategy would promote the expansion of goods and services production, reduce unemployment, increase exports, and ultimately stimulate economic growth, thus enhancing overall economic stability.
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