Effect of Militarization Components on the Economic Growth of the Middle Eastern Countries: A New Approach to the Defense-Growth Relationship

Document Type : Original Article

Author

Ph.D., Department of Economics, Faculty of Economics and Administrative Sciences, Lorestan University, Lorestan, Iran.

Abstract

Whilst numerous empirical studies have examined the relationship between military expenditures and economic growth, the present attempts to offer a new perspective on the subject by disaggregating militarization into its various components and analysing each component's constituent indicators. To achieve this purpose, the study employs an augmented Solow growth model and draws on statistical data from 11 Middle Eastern countries between the years 2000–2021.
The results obtained via panel cointegration analysis and the fully modified ordinary least squares (FMOLS) estimator indicates a negative and significant effect of military expenditure on economic growth. On the other hand, the components related to military personnel and the ratio of heavy weapons to the population have a positive and significant impact. The findings from further disaggregation of the expenditure components reveals a negative and significant effect of military spending as a percentage of GDP and the ratio of military spending to health expenditure on economic growth. When breaking down the personnel component, the results show a positive and significant effect of the ratio of military and paramilitary personnel to the population, as well as the ratio of military reserves to the population. However, the ratio of military and paramilitary personnel to the number of physicians has a negative impact on economic growth. Based on these findings, it can be concluded that the impact of militarization on economic growth depends on the composition of its components. Therefore, increases in financial and human resources dedicated to militarization should be accompanied by growth in other sectors that drive economic performance, such as health. Furthermore, defence spending should prioritize heavy and advanced weapons, alongside the enhancement of indigenous technology and knowledge in this field.

Keywords

References

دهمره، نظر؛ شهیکی‌تاش، مهیم و صفدری، مهدی. (1389). تأثیر شاخص‌های کلان بر توزیع درآمد در ایران (1353-1386). پژوهشنامه بازرگانی، 14(54)، 25-55.
فطرس، محمدحسن و گل‌خندان، ابوالقاسم. (1396). آزمون فرضیه اسلحه و (یا) رفاه در کشورهای با درآمد بالا، متوسط و پائین. علوم و فنون نظامی، 42، 5-29.
گل‌خندان، ابوالقاسم. (1393). بررسی و مقایسه تطبیقی تأثیر هزینه‌های نظامی یر رشد اقتصادی کشورهای درحال‌توسعه و توسعه‌یافته منتخب. تحقیقات توسعه اقتصادی، 15، 23-44.
گل‌خندان، ابوالقاسم. (1395). تعیین سطح بهینه‌ی بخش دفاعی در ایران از منظر اقتصادی. مدیریت نظامی، 15(60)، 176-212.
گل‌خندان، ابوالقاسم. (1398الف). مخارج دفاعی، تهدیدات خارجی و رشد اقتصادی: مطالعه تجربی ایران. علوم و فنون نظامی، 15(48).
گل‌خندان، ابوالقاسم. (1398ب). گزیده‌ای از موضوعات در علم اقتصاد دفاع (تقرب تجربی). جلد دوم، تهران: انتشارات نارون دانش.
گل‌خندان، ابوالقاسم و محمدیان منصور، صاحبه. (1398). هزینه‌های نظامی و رشد اقتصادی: مقایسه تطبیقی کشورهای واردکننده و صادرکننده سلاح. اقتصاد دفاع و توسعه پایدار، 4(12)، 27-45.
گلخندان، ابوالقاسم و محمدیان منصور، صاحبه. (1402). تاثیر شاخص های بی ثباتی سیاسی بر رشد اقتصادی کشورهای منطقه بین النهرین، مطالعات سیاسی بین النهرین، 2(3)، 341-373.
 
Aizenman, J. & Glick, R. (2006). Military Expenditure, Threats and Growth. The Journal of International Trade & Economic Development, 15(2), 129-155.
Arezki, R., & Brueckner, M. (2021). Natural resources and civil conflict: The role of military expenditures. Journal of Risk and Financial Management, 14(12), 575.
Becker, J. )2021(. Rusty Guns and Buttery Soldiers: Unemployment and the Domestic Origins of Defense Spending. European Political Science Review, 13(3), 307-330.
Becker, J., & Dunne, J. P. (2023). Military spending composition and economic growth. Defence and Peace Economics, 34(3), 259-271.
Becker, J. & Malesky, E. (2017). The Continent or the ‘Grand Large’? Strategic Culture and Operational Burden-Sharing in NATO. International Studies Quarterly, 61(1), 163-180.
Bove, V., & Cavatorta, E. (2012). From Conscription to Volunteers: Budget Shares in NATO Defence Spending. Defence and Peace Economics, 23(3), 273-288.
Chang, H. C., Huang, B. N., & Yang, C. W. (2011). Military expenditure and economic growth across different groups: A dynamic panel Granger-causality approach. Economic Modelling, 28(6), 2416-2423.
Compton, R. A., & Paterson, B. (2016). Military spending and growth: the role of institutions. Defence and Peace Economics, 27(3), 301-322.
d‘Agostino, G., Dunne, J. P. & Pieroni, L. (2019). Military Expenditure, Endogeneity and Economic Growth. Defence and Peace Economics, 30 (5), 509-524.
Dada, J. T., Awoleye, E. O., Arnaut, M., & Al-Faryan, M. A. S. (2023). Revisiting the Military Expenditure-Growth Nexus: Does Institutional Quality Moderate the Effect?. Peace Economics, Peace Science and Public Policy, 29(1), 19-42.
Desli, E., Gkoulgkoutsika, A., & Katrakilidis, C. (2017). Investigating the dynamic interaction between military spending and economic growth. Review of Development Economics, 21(3), 511-526.
Dunne, J. P., Smith, R. P., & Willenbockel, D. (2005). Models of military expenditure and growth: A critical review. Defence and peace economics, 16(6), 449-461.
Dunne, P., & Coulomb, F. (2008). Peace, war and international security: economic theories. In War, peace and security (pp. 13-36). Emerald Group Publishing Limited.
Dunne, J. P., & Tian, N. (2017). Military expenditure, economic growth and heterogeneity. In Defense Spending, Natural Resources, and Conflict (pp. 25-42). Routledge.
Grebe, J. (2011). The Global Militarization Index (GMI). Bonn international centre for conversion (BICC). Occas Pap, 7, 1-18.
Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of econometrics, 115(1), 53-74.
IPB. (2012). Opportunity Costs: Military Spending and the UN’s Development Agenda. Geneva: International Peace Bureau.
Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of econometrics, 90(1), 1-44.
Kao, C., & Chiang, M. H. (2001). On the estimation and inference of a cointegrated regression in panel data. In Nonstationary panels, panel cointegration, and dynamic panels (pp. 179-222). Emerald Group Publishing Limited.
Mowlaei, M., & Golkhandan, A. (2015). Dynamic analysis of the impact of military expenditure on economic growth in oil and non-oil countries in the Middle East. Iranian Economic Review, 19(2), 238-250.
Musayev, V. (2016). Externalities in military spending and growth: The role of natural resources as a channel through conflict. Defence and Peace Economics, 27(3), 378-391.
Phillips, P. C., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I (1) processes. The review of economic studies, 57(1), 99-125.
Smith, R. P. (1980). Military expenditure and investment in OECD countries, 1954–1973. Journal of comparative economics, 4(1), 19-32.
Stroup, M. D., & Heckelman, J. C. (2001). Size of the military sector and economic growth: A panel data analysis of Africa and Latin America. Journal of Applied Economics, 4(2), 329-360.
Yang, A. J., Trumbull, W. N., Yang, C. W., & Huang, B. N. (2011). On the relationship between military expenditure, threat, and economic growth: a nonlinear approach. Defence and Peace Economics, 22(4), 449-457.
Journal of Defense Economics and Sustainable Development
Volume 10, Issue 36
June 2025
Pages 39-66

Files

Share

How to cite

Statistics