Role of military industries as a leading industry in the economic growth of selected countries

Ali, Amin; Aleemran, Roya; Eskandari Sabzi, Sima

doi:10.22075/ijnaa.2024.33342.4961

Role of military industries as a leading industry in the economic growth of selected countries

Document Type : Research Paper

Authors

Amin Ali ¹

Roya Aleemran ²

Sima Eskandari Sabzi ¹

¹ Department of Economics, Miyaneh Branch, Islamic Azad University, Miyaneh, Iran

² Department of Economics, Tabriz Branch, Islamic Azad University, Tabriz, Iran

10.22075/ijnaa.2024.33342.4961

Abstract

Military and defence industries constitute one of the most critical strategic parts of any country, playing a vital role in ensuring national security. These industries influence various parts through diverse channels, impacting the economic standing and growth of nations. Moreover, countries often allocate a significant portion of their public expenditures to military and defence industries to counter external security threats. Given the importance of the topic, the primary objective of this research is to examine the impact of military industries' production in militarily producing countries on their economic growth. Data from 1990 to 2021 were analyzed using the dynamic panel least squares method to achieve this. The results indicate a significant positive impact of military industry production on the economic growth trajectory of countries producing military equipment. Additionally, variables such as foreign direct investment, net exports, technological advancement, inflation rate, and government size have a positive effect, while inflation rate and government size weaken economic growth in these countries. Therefore, policymakers and economic planners in militarily producing countries are recommended to allocate the military budget toward developing advanced military industries. This should be coupled with increased utilization of skilled and specialized labour, indigenous military and defence industry development, and reduction of reliance on military imports. These actions will likely lead to an improved trade balance, economic growth, and, subsequently, the economic condition of the nations.

Keywords

Economic Growth

Foreign Direct Investment

Military Industry Production

Government Size

Inflation

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