Is Military Expenditure Still Important for Economic Growth? Case for the Bucharest Nine (B-9) Countries
Is Military Expenditure Still Important for Economic Growth? Case for the Bucharest Nine (B-9) Countries

Summary/Abstract: Theoretical background: The economic growth (EG) effects of military expenditure (MEX) are of particu-lar interest in the defence economics literature. Based on the theoretical background, MEX has a two-sidedeffect on EG. An increase in MEX stimulates aggregate demand, which increases EG, whereas increasingMEX may crowd out investment and impede EG. The empirical literature does not agree on the relationshipbetween MEX and EG.Purpose of the article: This paper investigates the impact of MEX on EG using annual data from 1995to 2022 for a panel sample of the Bucharest Nine (B-9) countries, including Bulgaria, Czechia, Estonia,Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia.Research methods: The augmented mean group (AMG) estimator is employed as a second-generationpanel estimation technique to determine the relationship between MEX and EG.Main findings: The AMG estimator results for the panel group indicate that MEX has a positive effect onEG. Furthermore, gross fixed capital formation and exports of goods and services contribute to EG. Theempirical results vary country-specifically. For instance, MEX significantly impacts EG in Estonia, Hungary,Latvia, and Romania. In contrast, it negatively impacts EG in Czechia and Slovakia. Moreover, it has aninsignificantly positive impact in Bulgaria and Poland and an insignificantly negative effect in Lithuania.

• Details
• Contents