The political economy of military spending, freedom, conflicts, and economic growth in developing countries

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Date

2006-08-16

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Texas A&M University

Abstract

This study assesses the effect of politics on economic growth in developing societies. In this study I developed and applied an augmented production function model to 69 developing countries with several political variables: regime type, institutional freedom, political freedom, political stability, and ideological base. I investigated how changes of political contexts affect economic growth by applying non-linear least squares, and cross national time series techniques to the production function defensegrowth model utilizing time series data from 1960 to 2002. The results show that the impacts of political variables on economic growth are at least as significant as the economic variables; the externality of non-military spending has positive and significant impact on economic growth in the majority of countries; and the impacts of economic and military variables and their externalities’ effects on economic growth differ with different political contexts. The main findings of the study provide guidelines to policy decision makers in evaluating their “guns”-“butter” alternatives.

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Keywords

Defense, Growth

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