The Effect of Military Expenditures on Economic Growth: System GMM Aproach

Abstract

The main purpose of this study is to investigate the effect of military expenditures on economic growth via technology or positive externalities. This study examines the extent and interaction level of military expenditures with the main components of long-term economic growth, capital accumulation and technological progress. We run a panel data of 33 OECD countries and used System GMM to estimate the Augmented Solow and Feder Ram models. The study finds that the effect of the military expenditures on growth is negative and its lagged value is positive. The positive effect of the lagged value of the military expenditure brings to mind the functional spillover effect of technological advance. The estimation of Feder-RAM based model reveals that military expenditure has positive contribution to growth, although negative sign of the changing in military expediture GDP share suggests that civil sector driven growth should be dominant in economy. However, both models conclude that the impact of military spending on growth is small, but not insignificant. We conclude that the share of the millitary fixed capital investment and military R&D expenditures must be higher in order to increase the contribution of military expenditure to growth. Our study also proposes that supporting small arms producing sector via civil demand may also increase the positive effect of technology.

Keywords

• Military Expenditures
• Augmented Solow Model
• Feder-Ram Model
• System GMM Approach

Askeri Harcamaların İktisadi Büyümeye Etkisi: Sistem GMM Yaklaşımı

Abstract

Çalışmanın temel amacı, askeri harcamaların; teknoloji veya pozitif dışsallıklar üzerinden büyümeyi uyarıcı etkisinin araştırılmasıdır. Uygulamalı literatürde yaygın bir şekilde işlenmiş olan bu çalışma, uzun dönemli iktisadi büyümenin asıl bileşenleri olan sermaye birikimi ve teknolojik gelişmenin; transfer niteliğindeki askeri harcamalar değişkeni ile ne ölçüde ve nasıl etkileşim içinde olduğu konusunu incelemektedir. Burada, 33 OECD ülkesinin gözlem değerlerinden hareketle Genişletilmiş Solow Modeli ve Feder-RAM temelli modeller üzerinden; Sistem GMM yöntemiyle tahmin edilmiş model katsayıları yorumlanmıştır. Çalışmanın bulguları açısından, askeri harcamalar değişkeninin büyümeye etkisi Genişletilmiş Solow Modelinde negatif, aynı değişkenin gecikmeli değeri nise pozitif etkiye shiptir. Gecikmeli değerin pozitif etkisi akla teknolojik gelişmenin işlevsel yayılma etkisini getirmektetir. Feder-RAM temelli modelin tahmini sonucunda, askeri harcamalar değişkeninin büyümeye pozitif katkı yaptığı gözlemlenmiş olmakla birlikte çıktı içindeki payının değişim oranının negatif etki göstermesi, sivil sektör kaynaklı büyümenin baskın olması gerektiği hususunu düşündürmektedir. Bununla birlikte, her iki model de askeri harcamaların büyümeye etkisi kısmen önemlidir. Çünkü modelin tahmincisi katsayılar oldukça küçüktür. Ancak, devletlerin bekası gereği yapılması zorunlu olan bir harcama olan askeri mal ve hizmet üretiminin büyümeye katkısının artırılması için teknoloji ve bilgi artışını sağlayan sabit sermaye yatırımları ve ar-ge harcamalarının verimliğini artıracak politikalar geliştirimesi önemli olup karar alıcılar aaçısından da önensenmelidir. Bu çalışmada, hafif silah üreten firmaların sivil talep yönlü desteklenmesinin teknoloji dışşalığını artıracağı beklentisi ek bir öneri kapsamında sunulmaktadır.

Keywords

• Askeri Harcamalar
• Genişletilmiş Solow Modeli
• Feder-Ram Modeli
• Sistem GMM Yaklaşımı

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