Military Spending and Economic Growth in Greece, Portugal and Spain

Analysing the relationship between military spending and growth has been an important area of empirical research. Early studies focussed on large cross sections of countries, but criticisms of these led to a focus on case studies of individual countries and studies of groups of relatively homogeneous countries. Granger causality methods have also become common techniques for such analyses, both as single equation analyses and more recently, within a cointegrating VAR framework. This paper does two things. First it provides an empirical analysis of three of the EU’s poorest, peripheral economies, namely Greece, Portugal and Spain. It also considers the range of available Granger causality techniques and compares their results. It finds that the results differ across the methods used, indicating the problems with earlier studies, and across the countries, indicating the problems of drawing inferences across even relatively homogeneous economies.

Defence Spending and Economic Growth in the EU15

Over the last 30 years there has been an impressive amount of empirical work on the defence-growth nexus, using different methodologies, models and econometric techniques and focusing on individual case studies, cross-country studies or panel data studies. Despite the number and the variety of studies, the evidence on the defence-growth relationship is still far from conclusive. Rather surprisingly, very limited work has been published in the relevant literature for the European Union despite the continuous discussions for a Common European Defence Policy that would require an assessment of the economic effects of defence in this region. To fill in the gap in the literature, this paper employs an augmented Solow-Swan model and estimates it both with panel and time series methods to provide empirical evidence on the economic effects of defence spending in the EU15 over the period 1961-2007. Overall, evidence derived from both panel and time series methods is consistent and suggests that military burden does not promote economic growth in this region.Defence Spending, Economic Growth, Panel data, time series, EU15

Defence spending and economic growth: a case study of Greece and comparison with Spain and Portugal (1960-1996).

This thesis provides a case study of the economic effects of military expenditure in Greece and a comparison with two other similar countries. Portugal and Spain. Greece provides a particularly valuable focus for empirical investigation since tor many years it has been allocating a relatively high proportion of its national income to defence, much higher than other countries in NATO and EU. It is also situated in a complex geostrategic environment (the Balkans) and has many security concerns. in particular the confrontation with Turkey. At the same time. the Greek economy has gone through periods of high economic growth as well as periods of stagnation and has been the poorest member of the EU for the last two decades. Lick of a concensus on the economic effects of defence spending as well as the limited amount of research on the issue in newly industrialised economies intrigued the author and led to this research on whether high military expenditure has contributed to this poor economic performance. In this way the thesis contributes to an ongoing debate in the literature and provides a valuable additional case study. It provides a further contribution by comparing the results of the analysis for Greece with two similar economies, Spain and Portugal, giving insights into the transferability of results across countries. In undertaking this analysis, a systematic empirical approach is taken which employs three different methodologies: a Granger causality analysis, a supply-side analysis and a demand and supply analysis, all enriched with advanced econometric techniques. Overall, the results for Greece suggest that the high military burden has been harmful to economic performance and has made a significant contribution to- the backwardness of the economy. While the results for Portugal and Spain show some differences, they do not contradict the overall conclusion for Greece. Portugal shows a clear negative effect of military burden awhile the results for Spain are much less clearcut.

A causality analysis. Military expenditures and economic growth in USA and China.

Recent literature on military expenditures in the economic system has pointed out in recent years that China's role as not only economic but also military power, is becoming increasingly important, leading to China's emergence as a world military power capable of undermining the United States supremacy. The analysis undertaken tests the hypothesis that, in China, unlike the US, the increase in military spending is essentially due to the increase in GDP made available by Chinese economic boom. On the other hand, in US, the high military expenditures and its trend is the result of a strategic decision determined only partially and to a limited extent by GDP trends. Hypotheses validation implies that increase in Chinese military expenditure is fully explained by increase in GDP. On the other hand, in the United States, the variation in GDP explains only a part of variation in military spending, suggesting the possibility of investigating other factors determining their variation. The empirical analysis is performed through an econometric analysis accomplished using Toda-Yamamoto approach to Granger causality, impulse response function and variance decomposition analysis