Defence Expenditures and Economic Growth Nexus: A Panel Data Analysis.

This paper has tried to analyse the nexus between defence expenditures and economic growth using panel data from sixteen countries spanning from 1991 to 2013. A panel fixed effect model has been estimated for the all countries and the results show a negative effect on economic growth due to military expenditures, but this negative effect is negligible due to the statistically insignificant value of the coefficients. Thus, the effect of military expenditure on economic growth is very low compared to the effect of expenditures on the other undependable variables, the human capital, the fertility rate and life expectancy coefficients. The present study supports the Barro-growth model by stating that defence expenditures are neither effective nor an efficient way of achieving higher growth in the economy. [ABSTRACT FROM AUTHOR]