The Relationship Between Defense Expenditures and Economic Growth: The Case of Türkiye

This study aims to determine the impact of defense expenditures on economic growth in Türkiye for the period 1996-2022. Economic growth and defense are vital for the welfare and security of countries. Therefore, a three-stage time series method was employed to determine the impact of defense expenditures on economic growth in Türkiye. In the first stage, the stationarity levels of the variables were investigated using the Augmented Dickey-Fuller (ADF) unit root test and the Phillips-Perron (PP) unit root test. In the second stage, the presence of long-run relationships between the variables was examined using Johansen cointegration analysis. In the final stage, the long-run coefficients between the variables were estimated using the Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegration Regression (CCR) methods. The findings obtained from the analysis can be summarized as follows: i) According to the ADF and PP unit root test results, it was found that all variables contain unit roots at level values and become stationary when their first differences are taken. ii) In the Johansen cointegration analysis, the trace test and maximum eigenvalue test indicate that there are 2 cointegration equations between the variables. iii) According to the FMOLS, DOLS, and CCR methods, it was found that a 1 unit increase in the share of defense expenditures reduces economic growth approximately by 0.0776%.