1. bookVolume 59 (2021): Issue 3 (September 2021)
Journal Details
License
Format
Journal
eISSN
2217-3668
First Published
15 Apr 2014
Publication timeframe
4 times per year
Languages
English
access type Open Access

Panel Cointegration Analysis of Military Expenditure and Economic Growth in the Selected Balkan Countries

Published Online: 30 Dec 2021
Volume & Issue: Volume 59 (2021) - Issue 3 (September 2021)
Page range: 375 - 390
Received: 04 Sep 2020
Accepted: 02 Jul 2021
Journal Details
License
Format
Journal
eISSN
2217-3668
First Published
15 Apr 2014
Publication timeframe
4 times per year
Languages
English
Abstract

The issue of security and safety i s a fundamental condition for stable economic trends. Military expenditure can be a very powerful tool for a rapid economic growth. The paper examines the long-run relationship between military expenditure and economic growth in the selected Balkan countries, such as Albania, Bosnia and Herzegovina, Croatia, Montenegro, North Macedonia, Serbia and Slovenia for the period 2004-2018. The analysis implies a panel unit root test, a panel cointegration test, as well as a panel Granger causality test. The results have identified a long-run relationship between military expenditure and economic growth in the Balkan countries based on panel data analysis. Also, empirical findings have confirmed that shock experience in one of the countries’ military expenditure and economic growth have effect on other countries. Finally, the results have determined unidirectional causality from military expenditure to economic growth in these countries and not vice versa.

Keywords

JEL Classification

Acikgoz, B. & Cinar, S. (2017). Public Spending and Economic Growth: An Empirical Analysis of Developed Countries. Ekonomicky časopis, 65(5), 448-458. Search in Google Scholar

Adhikari, D. & Chen, Y. (2012). Energy Consumption and Economic Growth: A Panel Cointegration Analysis for Developing Countries. Review of Economics & Finance, 3, 68-80. Search in Google Scholar

Alpteki, A. & Levine, P. (2012). Military Expenditure and Economic Growth: A Meta-Analysis. European Journal of Political Economy, 28, 636-650. doi: 10.1016/j.ejpoleco.2012.07.02. Search in Google Scholar

Azam, M. & Feng, Y. (2015). Does military expenditure increase external debt? Evidence from Asia. Defence and Peace Economics, 28(5), 550-567. doi: 10.1080/10242694.2015.1072371.10.1080/10242694.2015.1072371 Search in Google Scholar

Barros, C. (2002). Development and conflict in the Balkans: Catch-up and military expenditure. Defence and Peace Economics, 13(5), 353-363. doi: 10.1080/10242690213510.10.1080/10242690213510 Search in Google Scholar

Benoit, E. (1978). Growth and Defence in LDCs. Economic Development and Cultural Change, 26: 271-280. Search in Google Scholar

Biscione, A. & Caruso, R. (2019). Military Expenditures and Income Inequality Evidence form a Panel of Transition Countries (1990-2015). Defence and Peace Economics: 1-22. doi: 10.1080/10242694.2019.1661218.10.1080/10242694.2019.1661218 Search in Google Scholar

Cevik, S. & Ricco, S. (2017). No Buck for the Bang: Revisiting the Military-Growth Nexus. Empirica 45, 639-653. doi: 10.1007/s10663-017-9380-8.10.1007/s10663-017-9380-8 Search in Google Scholar

Churchill, S. & Yew, S.Y. (2017). The Effect of Military Expenditure on Growth: An Empirical Synthesis. Empirical Economics, 55, 1357-1387. doi: 10.1007/s00181-017-1300-z.10.1007/s00181-017-1300-z Search in Google Scholar

Compton, R. & Paterson, B. (2015). Military Spending and Growth: The Role of Institutions. Defence and Peace Economics, 27(3), 301-322. doi: 10.1080/10242694.2015.1060022.10.1080/10242694.2015.1060022 Search in Google Scholar

Daddi, P., D’Agostino, G. & Pieroni, L. (2016): Does military spending stimulate growth? An empirical investigation in Italy. Defence and Peace Economics, 29(4), 440-458. doi: 10.1080/10242694.2016.1158438.10.1080/10242694.2016.1158438 Search in Google Scholar

D’Agostino, G., Dune, J.P. & Pieroni, L. (2017). Military Expenditure, Endogeneity and Economic Growth. Defence and Peace Economics, 30(5), 1-16. doi: 1080/10242694.2017.1422314. Search in Google Scholar

D’Agostino, G., Dunne, J.P., Lorusso, M. & Pieroni, L. (2020). Military Spending, Corruption, Persistence and Long Run Growth. Defence and Peace Economics, 1-11. doi: 10.1080/10242694.2020.1751503.10.1080/10242694.2020.1751503 Search in Google Scholar

Dimitraki, O. & Menla-Ali, F. (2015). The Long-Run Causal Relationship between Military Expenditure and Economic Growth in China: Revisited. Defence and Peace Economics, 26(3), 311-326. doi: 10.1080/10242694.2013.810024.10.1080/10242694.2013.810024 Search in Google Scholar

Dimitraki, O. & Win, S. (2020). Military Expenditure Economic Growth Nexus in Jordan: An Application of ARDL Bound Test Analysis in the Presence of Breaks. Defence and Peace Economics, 1-18. doi: 10.1080/10242694.2020.173011. Search in Google Scholar

Domazet, I., Zubović, J. & Lazić, M. (2018). Driving Factors of Serbian Competitiveness – Digital Economy and ICT. Strategic Management, 23(1), 20-28.10.5937/StraMan1801020D Search in Google Scholar

Dunne, J.P. & Tian, N. (2013). Military Expenditure, Economic Growth and Heterogeneity. Defence and Peace Economics, 26(1), 15-31. doi: 10.1080/10242694.2013.848575.10.1080/10242694.2013.848575 Search in Google Scholar

Dunne, J.P. & Smith, R.P. (2019). Military Expenditure, Investment and Growth. Defence and Peace Economics, 1-14. doi: 10.1080/10242694.2019.1636182.10.1080/10242694.2019.1636182 Search in Google Scholar

Emmanoulidis, K. & Karpetis, C. (2018). The Defense-Growth Nexus: A Review of Time Series Methods and Empirical Results. Defence and Peace Economics, 1-18. doi: 10.1080/10242694.2018.1428261.10.1080/10242694.2018.1428261 Search in Google Scholar

Hou, N. & Chen, B. (2013). Military expenditure and economic growth in developing countries: Evidence from system GMM estimates. Defence and Peace Economics, 24(3), 183-193. doi: 10.1080/10242694.2012.710813.10.1080/10242694.2012.710813 Search in Google Scholar

Farzanegan, M.R. (2012). Military Spending and Economic Growth: The Case of Iran. Defence and Peace Economics, 25(3), 247-269. doi: 10.1080/10242694.2012.72316010.1080/10242694.2012.723160 Search in Google Scholar

Furuoka, F., Oishi, M. & Karim, M. (2014). Military expenditure and economic development in China: an empirical inquiry. Defence and Peace Economics, 27(1), 137-160. doi: 10.1080/10242694.2014.898383.10.1080/10242694.2014.898383 Search in Google Scholar

Khalid, U. & Habimana, O. (2019). Military Spending and Economic Growth in Turkey: A Wavelet Approach. Defence and Peace Economics, 1-15. doi: 10.1080/10242694.2019.1664865.10.1080/10242694.2019.1664865 Search in Google Scholar

Kollias, C., Paleologou, S.M., Tzeremes, P. & Tzeremes, N. (2017). Defence expenditure and economic growth in Latin American countries: evidence from linear and nonlinear causality tests. Latin American Economic Reviews, 26(2), 1-25. doi: 10.1007/s40503-017-0039-4.10.1007/s40503-017-0039-4 Search in Google Scholar

Kollias, C. & Paleologou. S. (2019). Military Spending, Economic Growth and Investment: A Disaggregated Analysis by Income Group. Empirical Economics, 56(3), 935-958. doi: 10.1007/s00181-017-1379-2.10.1007/s00181-017-1379-2 Search in Google Scholar

Loganathan, N., Ismail, S., Streimikiene, D., Hassan, A., Zavadskas, E. & Mardini, A. (2018). Tax Reform, Inflation, Financial Development and Economic Growth in Malaysia. Romanian Journal of Economic Forecasting, 20(4), 152-165. Search in Google Scholar

Malizard, J. (2010). Causality between Economic Growth and Military Expenditure: The Case of France. Defence & Security Analysis, 26(4), 401-413. doi: 10.1080/14751798.2010.534648.10.1080/14751798.2010.534648 Search in Google Scholar

Malizard, J. (2016). Military Expenditure and Economic Growth in the European Union: Evidence from SIPRI’s Extended Dataset. Economics of Peace and Security Journal, 11(2): 38–44. Search in Google Scholar

Manamperi, N. (2016). Does Military Expenditure Hinder Economic Growth? Evidence from Greece and Turkey. Journal of Policy Modeling, 38(6), 1171–1193. doi: 10.1016/j.jpolmod.2016.04.003.10.1016/j.jpolmod.2016.04.003 Search in Google Scholar

Markowski, S., Chand, S. & Wylie, R. (2017). Economic Growth and Demand for Military Expenditure in the Indo-Pacific Asia Region. Defence and Peace Economics, 28(4), 473-490. doi: 10.1080/10242694.2016.1274059.10.1080/10242694.2016.1274059 Search in Google Scholar

Nikolaidou, E. (2016). Greece, Portugal, Spain: New Evidence on the Economic Effects of Military Expenditure Using the New SIPRI Data. Economics of Peace and Security Journal, 11(2): 20-27. Search in Google Scholar

Pan, C.I., Chang, T. & Wolde-Rufael, Y. (2015). Military spending and economic growth in the Middle East countries: Bootstrap panel causality test. Defence and Peace Economics, 26(4), 443-456. doi: 10.1080/10242694.2014.891356.10.1080/10242694.2014.891356 Search in Google Scholar

Petrov, V. & Trivić, N. (2018). The problem of defining and measuring sustainable income. The Annals of the Faculty of Economics in Subotica, 54(39), 19-31.10.5937/AnEkSub1839019P Search in Google Scholar

Pieroni, L. (2009). Military Expenditure and Economic Growth. Defence and Peace Economics, 20(4), 327-339. doi: 10.1080/10242690701589876.10.1080/10242690701589876 Search in Google Scholar

Phiri, A. (2017). Does Military Spending Nonlinearly Affect Economic Growth in South Africa? Defence and Peace Economics, 1-14. doi: 10.1080/10242694.2017.1361272.10.1080/10242694.2017.1361272 Search in Google Scholar

Saba, C.S. & Ngepah, N. (2019). Military expenditure and economic growth: evidence from a heterogeneous panel of African countries. Economic Research – Ekonomska istraživanja, 32(1), 3586-3606. doi: 10.1080/1331677X.2019.1674179.10.1080/1331677X.2019.1674179 Search in Google Scholar

Smith, R. (2017). Military Expenditure Data: Theoretical and Empirical Considerations. Defence and Peace Economics, 28(4), 422-428. doi: 10.1080/10242694.2016.124582310.1080/10242694.2016.1245823 Search in Google Scholar

Tiwari, A.K. & Shahbaz, M. (2013). Does defence spending stimulate economic growth in India? A revisit. Defence and Peace Economics, 24(4), 371-395. doi: 10.1080/10242694.2012.710814.10.1080/10242694.2012.710814 Search in Google Scholar

Yildrim, J. & Öcal, N. (2014). Military expenditures, economic growth and spatial spillovers. Defence and Peace Economics, 27(1), 87-104. doi: 10.1080/10242694.2014.960246.10.1080/10242694.2014.960246 Search in Google Scholar

Yilgör, M., Karagöl, E.T. & Saygili, C.A. (2012). Panel Causality Analysis between Defence Expenditure and Economic Growth in Developed Countries. Defence and Peace Economics, 25(2), 193–203. doi:10.1080/10242694.2012.724879.10.1080/10242694.2012.724879 Search in Google Scholar

Yolcu Karadam, J., Yildrim, J. & Öcal, N. (2017). Military expenditure and economic growth in Middle Eastern countries and Turkey: A non-linear panel data approach. Defence and Peace Economics, 28(6): 719-730. doi: 10.1080/10242694.2016.119557310.1080/10242694.2016.1195573 Search in Google Scholar

Utrero-González, N., Hromcová, J. & Callado-Muñoz, F.J. (2017). Defence Spending, Institutional Environment and Economic Growth: Case of NATO. Defence and Peace Economics, 1–24. doi:10.1080/10242694.2017.1400292.10.1080/10242694.2017.1400292 Search in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo