The Impact of Defence Spending on Income Inequality in Selected Asian Countries: A Comparative Analysis

This study is based on the long-term and causal association dubbed between defence expenditure and income inequality amongst the five Asian economies namely Malaysia, Japan, Iran, Sri Lanka and Singapore during the study period of 1980 to 2022. The analysis employs panel econometric approaches with the use of the Levin, Lin and Chu (LLC) and Im, Pesaran and Shin (IPS) unit root tests, Pedroni panel cointegration test, Fully Modified Ordinary Least Squares (FMOLS) and Dumitrescu-Hurlin panel causality test. The result indicates a long-run equilibrium association amid the variables, with defence spending, GDP growth, and armed forces significantly contributing to income inequality. Bidirectional causality is observed between inequality and GDP growth, as well as between inequality and GDP per capita. Such findings offer valuable information to policy-makers who have to strike the balance between security spending and inclusive growth.