Causality between Military Expenditure and Economic Growth in Advanced and Developing countries

Abstract

The purpose of this paper is to analyze the defense-growth relationship. We estimate the economic growth equation based on Feder-Ram model for advanced and developing economies using panel data over the period 1995-2003. Now, we should consider converting security measures to cope with nonconventional conflict. The empirical results suggest that defense expenditure has a positive impact on the rate of economic growth in both economies. Military burden doesn't have much negative effect on economies in this period.