Economic Growth and Defense Spending in Developing Countries

This article investigates the causal relationship between economic growth and defense spending in 77 developing countries. The study employs Granger-causality tests using annual time series data for each of the 77 countries to analyse the presence and direction of causality between the two variables. The results indicate that the relationship between economic growth and defense spending cannot be generalized across countries. It may depend, among other things on the sample period of study and the level of socioeconomic development of the country concerned.