South Asian Association for Regional Cooperation (SAARC) is the regional intergovernmental organization and geopolitical union of nations in South Asia. Its member states include Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan and Sri Lanka. SAARC comprises 3% of the world's area, 21% of the world's population and 3.8% (US$ 2.9 trillion) of the global economy, as of 2015. SAARC was founded in Dhaka on 8th December 1985. Its secretariat is based in Kathmandu, Nepal. The organization promotes development of economic and regional integration. It launched the South Asian Free Trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.
Published in Chapter:
Defense Expenditure and Economic Performance in SAARC Countries
Sudhansu Sekhar Mahapatra (Sikkim University, India), Madhabendra Sinha (National Institute of Technology Durgapur, India), Anjan Ray Chaudhury (Durgapur Government College, India), Abhijit Dutta (Sikkim University, India), and Partha Pratim Sengupta (National Institute of Technology Durgapur, India)
Copyright: © 2018
|Pages: 13
DOI: 10.4018/978-1-5225-4778-5.ch003
Abstract
Governments in most of the nations aim to fulfil their requirements and protect themselves with the necessities of public life from the external threats, and also try to separate a significant portion for defense-related spending from the budget. But the impact of defense expenditures on economic growth is not apparent. It deserves an empirical investigation to explore the external effect of defense spending on the economic performance of the country. The authors choose six SAARC countries, namely Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka, where defense-related issues regarding internal security as well as external relationships with neighbor countries are the most significant to examine the relationship between defense expenditures and economic performance measured by GDP growth. The method of GMM estimation is applied in a dynamic panel structure of selected countries over the period 1970-2016. Empirical findings show that, besides some possible factors, defense spending has a positive and significant impact on economic growth in SAARC member nations.