Military spending and economic growth: a panel data investigation

The present study examines the worldwide effect of military spending on economic growth for the period 1960-2017 utilizing the dynamic common correlated effects estimator that accounts for country heterogeneity and cross-sectional dependence, while it provides not only sample-average coefficients but country-specific coefficients as well. Overall, the worldwide effect of military spending on economic growth over the period 1960-2017 appears to be negative, and this originates from the cold war and early post-cold war era and is especially evident for the North Atlantic Treaty Organization countries. For the post-cold war era, a neutral effect (i.e., no statistical significance) is apparent for the majority of countries. At the country-specific level, there are some economies that consistently benefit or suffer from military spending, while the type of the individual impact for most of the countries varies over different time periods, with no clear pattern.

Automated summary

The study finds that the overall impact of military spending on economic growth from 1960 to 2017 is negative on a global scale. Particularly, NATO countries are significantly affected, while most countries show a neutral effect in the post-cold war era. At the country-specific level, certain economies consistently benefit or suffer from military spending, with varying impacts over different time periods for most countries, showing no clear pattern.