The Effect of Defense Expenditures and Peace on Economic Growth: Evidence From European Union Transition Economies

Abstract

Throughout history countries have tried to gain power in order to get advantages for the issues such as providing territorial integrity, social security and internal and external security. As a result of this power-gaining race, defense expenditures had a significant place in countries' economies. In its broad sense, defense expenditures are defined as the share reserved from the national income for the country's defense in order to provide internal and external security of the state and maintain the order and safety of the community. The size of defense expenditures varies from country to country for various reasons. In this study the effect of defense expenditures and peace as a global public good on economic growth was analyzed in 11 European Union countries (transition economies) between 2007 and 2017 with the help of panel data analysis. As a result of the study it was found out that there was a positive relationship between economic growth and defense expenditures. However, a negative relationship was identified between economic growth and peace level.