Relationship between oil price volatility and military expenditures in GCC countries

Natural resource-rich countries transfer more sources to military expenditures due to extreme security concerns. As public revenues have declined due to the decline in oil prices, military expenditures have been cut in many countries. Nevertheless, this is not valid for all countries. Even in some c...

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Bibliographic Details
Published in:Environmental science and pollution research international 2020-05, Vol.27 (14), p.17072-17084
Main Authors: Erdoğan, Seyfettin, Çevik, Emrah İsmail, Gedikli, Ayfer
Format: Article
Language:English
Subjects:
Aquatic Pollution
Atmospheric Protection/Air Quality Control/Air Pollution
Cointegration analysis
Earth and Environmental Science
Ecotoxicology
Environment
Environmental Chemistry
Environmental Health
Environmental science
Error correction
Expenditures
Military
Natural resources
Oil
Prices
Research Article
Volatility
Waste Water Technology
Water Management
Water Pollution Control
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Summary:Natural resource-rich countries transfer more sources to military expenditures due to extreme security concerns. As public revenues have declined due to the decline in oil prices, military expenditures have been cut in many countries. Nevertheless, this is not valid for all countries. Even in some countries, despite the decrease in oil prices and volatility, military expenditures increase. The aim of this study is to investigate the relationship between volatility in oil prices and military expenditures in GCC countries (United Arab Emirates, Bahrain, Qatar, Kuwait, Saudi Arabia, and Oman). The analysis period was determined differently for each country depending on the availability of data. UAE and Qatar were excluded from the analysis as the defense expenditures data of these countries could not be provided regularly. ARDL model was preferred for the research. According to the bound test results, there is a cointegration relationship between the variables in all countries. Besides, the long-term results showed that the volatility in oil prices in all countries, except for Bahrain, positively affects military expenditures. The error correction model indicated that there is a reverse relationship between oil price volatility and military expenditures. These findings indicated that despite the volatility in oil prices, military expenditures in GCC countries are not reduced.
ISSN:0944-1344
1614-7499
DOI:10.1007/s11356-020-08215-3