Will Military Expenditure Secure National Peace and Spur Economic Growth?

Abstract

Peace has been seen to be a great factor for economic development as claimed by literature. This study aimed to establish causal relationship between military expenditure and national state of peace and further determined the effect of national peace to economic growth using binary and nominal logistics regression. With the use of a statistical software, it generated four logits according to countries’ state of peace. Findings revealed that increasing military expenditures to those countries whose state of peace were high and very high did not further improve peacefulness. However, for those countries whose state of peace were very low, low, and medium, reducing or increasing the military expenditure will result to a deterioration or improvement in the level of state of peace. Thus, military budgets will be a crucial decision for developing countries but not for the developed and generally peaceful countries. Further, result showed that the state of peace of a country did not have significant effect on the economic growth in the following year. In conclusion, peacefulness and productivity cannot be directly realized in one or two years after the investment in military expenditures.