Defence Spending, Economic Growth and Regional Balance: Evidence from Azerbaijan and Armenia

Year 2024, Volume: 9 Issue: 2, 397 - 426, 30.06.2024

Murat Jane , Mortaza Ojaghlou

https://doi.org/10.25229/beta.1403382

Abstract

Military expenditures have a significant impact not only on the socioeconomic condition of a state but also on the regional balance of power. In this study it will be examined the relationship between military expenditures and economic conditions in Azerbaijan and Armenia and impacts of military expeditures on the regional balance. In the context of the diplomatic history from the First Karabakh War to the Second Karabakh War, the regional balance between the two states is clarified. Then the complex relationship between military expenditures and economic conditions is empirically analyzed via using non-linear ARDL and ARDL limited test methods.
The empirical findings indicate that in Azerbaijan, military spending aligns with the Military-led Standard of Living Improvement Hypothesis, whereas its positive effect on well-being in Armenia is minimal. Specifically, military expenditure positively influences the standard of living and well-being in Azerbaijan, as evidenced by both the ARDL Bound and multiplier effect. Conversely, according to the Military Burden Hypothesis, military spending poses a burden on the budgets of both countries. Nevertheless, this burden is more pronounced for Azerbaijan compared to Armenia, where the adverse impact of military expenditure is comparatively lesser.

Keywords

Azerbaijan, Armenia, Nagorno Karabakh, Military spending

Savunma Harcamaları, Ekonomik Büyüme ve Bölgesel Denge: Azerbaycan ve Ermenistan'dan Kanıtlar

Abstract

Askeri harcamalar sadece bir devletin sosyoekonomik durumu üzerinde değil, aynı zamanda bölgesel güç dengesi üzerinde de önemli bir etkiye sahiptir. Bu çalışmada, Azerbaycan ve Ermenistan'daki askeri harcamalar ile ekonomik koşullar arasındaki ilişki ve bu harcamaların bölgesel denge üzerindeki etkileri incelenmektedir. Birinci Karabağ Savaşı'ndan İkinci Karabağ Savaşı'na kadar olan diplomasi tarihi bağlamında, iki devlet arasındaki bölgesel denge açıklığa kavuşturulmaktadır. Ardından, askeri harcamalar ile ekonomik koşullar arasındaki karmaşık ilişki, non-linear ARDL ve ARDL sınırlı test yöntemleriyle empirik olarak analiz edilmektedir.
Empirik bulgular, Azerbaycan'da askeri harcamaların Askeri Destekli Yaşam Standardı İyileştirme Hipotezi ile uyumlu olduğunu, Ermenistan'da ise refah üzerindeki olumlu etkisinin minimal düzeyde olduğunu göstermektedir. Özellikle, askeri harcamalar, hem ARDL Bağlantısı hem de çarpan etkisi ile kanıtlandığı üzere, Azerbaycan'da yaşam standardını ve refahı olumlu yönde etkilemektedir. Tersine, Askeri Yük Hipotezine göre, askeri harcamalar her iki ülkenin bütçeleri üzerinde bir yük oluşturmaktadır. Bununla birlikte, bu yük, askeri harcamaların olumsuz etkisinin nispeten daha az olduğu Ermenistan'a kıyasla Azerbaycan için daha belirgindir.

Keywords

Azerbaycan, Ermenistan, Dağlık Karabağ, Askeri harcama

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