ScholarOne - Military Expenditures and Growth: Evidence from NATO and
non-NATO alliances
Abstract
Given its significant socioeconomic implications, the nexus between
military expenditures and economic growth has been the subject of an
extensive theoretical and empirical debate. The present study focuses on
NATO vs. non-NATO member countries as a case study to empirically
examine the aforementioned complex relationship. Using annual data, we
employ a panel model, as well as spectral preliminary analysis that
takes into account the nonlinear behaviour of our series, positive or
negative causal relationships and their coherence characteristics across
both time and frequency domains. Findings reported herein from an
extended panel of several states suggest that military expenditure
enhances economic growth under the NATO alliance case, whereas it
becomes harmful for growth in the case of non-NATO alliances such as the
SCO & CSTO. Our study contributes to the understanding on the crucial
role of a military alliance membership in the formation of the economic
growth and military spending relationship. Hence, our findings can be
beneficial for policymakers to account for the existence of possible
spillovers that may arise from country participation in a military
alliance.