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Military Expenditures Worldwide: Determinants and Trends, 1972–1988

Published online by Cambridge University Press:  28 November 2008

Daniel Hewitt
Daniel Hewitt
Affiliation:
Economist, International Monetary Fund*
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Abstract

This paper examines trends in world military expenditures and offers an econometric examination of their determinants in 125 countries from 1972 to 1988. A simultaneous equation framework based on a public choice model shows military expenditures as a ratio of GDP to be influenced by the level of GDP, central government expenditures, other financial indicators, the form of government, and geographical characteristics of countries. The study also examines the opportunity cost of military expenditures and analyzes the budgetary trade-off between military, social, and development expenditures. Although military expenditures may benefit a given country, they may also have a negative impact on the welfare of rival nations. Hence a coordinated reduction in military expenditures that does not alter the strategic balance will increase economic wellbeing in the world.

Type
Articles
Information
Journal of Public Policy , Volume 12 , Issue 2 , April 1992 , pp. 105 - 152
Copyright
Copyright © Cambridge University Press 1992

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