Military expenditure and economic growth: A meta-analysis

Meta analysis is conducted to review 32 empirical studies with 169 estimates of the effect of military expenditure on economic growth. We formulate four hypotheses to examine the empirical evidence and to provide overall conclusions while controlling for systematic heterogeneity in the studies reviewed. The hypotheses are: (H1) Military expenditure reduces economic growth; (H2) Military expenditure is detrimental to economic growth in less developed countries (LDCs); (H3) The effect of military expenditure on economic growth is positive and (H4) The effect of military expenditure on economic growth is non-linear. We find that the hypothesis of a negative military expenditure-growth relationship is not supported for both LDCs and in general, while a positive effect of military expenditure on economic growth is supported for developed countries. The hypothesis of a non-linear military expenditure-growth relationship is confirmed. The main sources of study-to-study variation in the findings of military expenditure and economic growth literature are attributable to the sample, time periods, and functional forms.

► The effect of military expenditure on economic growth is practically insignificant. ► The military expenditure-growth nexus is non-linear. ► Data and time-periods also contribute to the variations in the findings. ► The effect of military expenditure on growth is insignificant for LDC. ► The effect of military expenditure on growth is positive for developed countries.