An augmented two-sector growth model is derived to analyse the effects of the military burden and government expenditure on the growth of GNP in selected Middle Eastern countries. The empirical results reveal that the military burden and related activities had a negative effect on the growth of GNP in the period 1974-85. The size of the government sector, oil prices and capital formation, in turn, had positive effects on economic growth. The difference in marginal productivity in different sectors is relatively small and the positive externality effect of the government on private consumption is fairly large. Country-specific factors had a minor effect on the result.
Get full access to this article
View all access options for this article.
References
1.
Benoit, Emile , 1973. Defense and Economic Growth in Developing Countries. Boston, MA: Heath.
2.
Benoit, Emile , 1978. `Growth and Defense in Developing Countries', Economic Development and Cultural Change, vol. 26, no. 2, January, pp. 271-280.
3.
Biswas, Basudeb & Rati Ram, 1986. `Military Expenditures and Economic Growth in Less Developed Countries: An Augmented Model and Further Evidence', Economic Development and Cultural Change, vol. 34, no. 2, January, pp. 361-372.
4.
Deger, Saadet , 1986. Military Expenditures in Third World Countries: The Economic Effects. London: Routledge & Kegan Paul.
5.
Feder, Gershon , 1983. `On Exports and Economic Growth', Journal of Development Economics, vol. 12, no. 1, February, pp. 59-73.
6.
Hsiao, Cheng , 1986. Analysis of Panel Data. Cambridge: Cambridge University Press.
7.
Looney, Robert , 1988. Third-World Military Expenditure and Arms Production. London: Macmillan.
8.
Looney, Robert , 1989. `Internal and External Factors in Effecting Third World Military Expenditures', Journal of Peace Research, vol. 26, no. 1, February, pp. 33-46.
9.
Ram, Rati , 1986. `Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data', The American Economic Review, vol. 76, no. 1, March, pp. 191-203.
10.
Stockholm International Peace Research Institute 1983-87. World Armaments and Disarmaments: SIPRI Yearbook. London/Philadelphia, PA: Taylor & Francis, from 1987: Oxford/New York: Oxford University Press.
11.
Summers, Robert & Alan Heston, 1984. `Improved International Comparisons of Real Product and its Composition, 1950-80', The Review of Income and Wealth, vol. 30, no. 2, June, pp. 207-262.
12.
United Nations , 1977-87. Yearbook of National Accounts Statistics, Vol. I, Individual Countries (various years). New York: United Nations.
13.
World Bank , 1977-87. World Tables (various years). Baltimore, MD: Johns Hopkins University Press.
