Determinants of Military Expenditure and its Consequences for Economic Growth

Student: Sabilov Arslan

Faculty: International College of Economics and Finance

Educational Programme: Double degree programme in Economics of the NRU HSE and the University of London (Bachelor)

Year of Graduation: 2018

This paper examines the impact of military spending on the country's economic growth, as well as the factors that determine military spending. Using panel data for 119 countries in the period 1992-2016, an exogenous and valid instrument for military expenditures was built. Further, an analysis of the effect of military burden on economic growth through fixed effects was carried out. The analysis revealed a negative impact of military burden on GDP growth and the positive impact of lagged military spending on GDP growth. Significant results for some subgroups are also described. The scientific novelty of the work is to build a good instrument for military expenditures, as well as to take into account all the econometric problems that are revealed in the course of the analysis.

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