Benoit Revisited: DEFENSE SPENDING AND ECONOMIC GROWTH IN LDCs: BENOIT'S HYPOTHESES, DEFINITIONS, AND EVIDENCE THE ADVERSE GROWTH EFFECTS OF DEFENSE THE FAVORABLE GROWTH EFFECTS OF DEFENSE THE CONCEPTS OF GROWTH, DEFENSE, AND AID BENOITS CORRELATIONS TESTS USING STRUCTURAL MODELS CONCLUSIONS REFERENCES

In the early 1970s, Emile Beniot shocked development economists by presenting positive cross-country correlations between military expenditure rates and economic growth rates in less developed countries (LDCs). This article reviews the long debate that has followed. While the studies surveyed here d...

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Bibliographic Details
Published in:The Journal of conflict resolution 1989-06, Vol.33 (2), p.318
Main Authors: Grobar, Lisa M, Porter, Richard C
Format: Article
Language:English
Subjects:
Calculus
Capital stock
Correlation
Defense spending
Developed Nations
Developing countries
Economic growth
Economic Progress
Estimates
Expenditures
GDP
Gross Domestic Product
Human Capital
Hypotheses
Investments
LDCs
Productivity
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Summary:In the early 1970s, Emile Beniot shocked development economists by presenting positive cross-country correlations between military expenditure rates and economic growth rates in less developed countries (LDCs). This article reviews the long debate that has followed. While the studies surveyed here differ widely in method and focus, the empirical results point to similar conclusions. First, efforts at re-estimating Benoit's correlation coefficients for different samples and different time periods all fail to reproduce Benoit's results. Second, while some studies uncover evidence of positive effects of military spending through human capital formation and technological "spin-off" effects, models that allow military spending to affect growth through multiple channels find that, while military spending may stimulate growth through some channels, it retards it through others, and the net effect is negative. The most important negative effect is that higher military spending reduces national saving rates, thereby reducing rates of capital accumulation.The existence of positive effects of military spending on economic growth, as conjectured by Benoit, still cannot be ruled out. However, the recent econometric evidence points to the conclusion that these positive effects, if they exist, are small relative to the negative effects, and that, overall, military spending has a weak but adverse impact on economic growth in developing countries.
ISSN:0022-0027
1552-8766