Top Arms Importers
Description
This study investigates whether there is a systematic relationship between the weapons trade, military expenditure, and economic growth. While some perceive military spending as a guarantee of security and peace, others see it as a foolish endeavor that could spark arms races or armed conflict. This study adopts a CS-ARDL approach to investigate the nexus between arms imports, military expenditure, and per capita GDP for a balanced panel of eight of the top arms importers in the world from 1990 to 2021. It also uses other second-generation tests, such as CIPS and Westerlund's (2007) cointegration and FMOLS, for the robustness of the analysis. We find that armed imports negatively impact GDP per capita, but military spending is beneficial over the long and short term. We also used the Dumitrescu Hurlin Granger causality test, which revealed a bidirectional feedback effect between military expenditure and per capita GDP and a unidirectional causal relationship from military spending to arms imports. The findings of this paper support the Keynesian and Wagnerian hypothesis that with an increase in state responsibilities, government spending and economic growth go hand in hand.