The Relationship between Military Expenditure and Certain Growth and Development Related Variables in Transition Economies: A Panel Data Analysis

Abstract

The paper examines the relation between military expenditure and three growth and development related variables (GDP growth, GDP per capita and Industry Value Added) in 31 transition economies during the 1989-2014 period. The empirical results reflect a positive association between military expenditure and the examined growth and development variables. The causality analysis shows though that the causality direction runs from the examined growth and development related variables towards military expenditure in all cases. This in turn reveals a common tendency in the studied economies, which is related to the tensions and developments in the wider studied area.