Economic Causes and Consequences of Defense Expenditures in the Middle East and South Asia

Economic Causes and Consequences of Defense Expenditures in the Middle East and South Asia

Economic Causes and Consequences of Defense Expenditures in the Middle East and South Asia

Economic Causes and Consequences of Defense Expenditures in the Middle East and South Asia

Excerpt

As growing fiscal problems prompt governments to reorder their spending priorities, it is apparent that decision-makers in the Middle East and South Asia are examining the potential costs and benefits of allocations to the military.Conventional wisdom has long argued that heavy outlays on defense divert scarce resources from directly productive investment (for example, infrastructure) and human capital formation (for example, education and health). While this view may make intuitive sense, there is evidence that military expenditures do not necessarily reduce overall economic growth in developing countries as a whole.1 Defense expenditures may in some instances act as an economic stimulus in various ways such as financing heavy industry and the acquisition of advanced technologies, providing employment, and attracting investment.2.This study examines the relationship between defense spending and economic performance in the developing world in general, and in nine countries in the Middle East and South Asia in particular-Algeria, Egypt, Iran, Iraq, Israel, Syria, Saudi Arabia, Pakistan and India. It seeks to answer the following questions: . . .

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