Theoretical and Applied Economics
No. 1 / 2016 (606), Spring
Nexus between defense expenditure and economic growth in BRIC economies: An empirical investigation
Indian Institute of Technology, Ropar, Punjab, India
Debi Prasad BAL
Xavier Institute of Management, Bhubaneswar, Odisha, India
Manoranjan SAHOO
Indian Institute of Technology, Madras, Tamil Nadu, India
Abstract. This paper considers the defense expenditure and economic growth nexus based on the cross-border problems and increasing geo-political presence for BRIC blocs over the period 1993-2014. Our approach is more methodological in terms of employing Panel cointegration and causality to highlight the fundamental relation between the defense expenditure and economic growth. Here we emphasize various economic considerations in terms of pre and post war, strategic and spatial phenomenon to capture the magnitude of gains from the increased defense spending in the region. We are using panel unit-root; panel cointegration and panel-Granger causality to highlight the fundamental relationship between the variables. We conclude by discussing the issues as well as quantifying the consequences of present geostrategic conditions associated with these economies.
Keywords: Defense Expenditure, BRIC, Panel cointegration.
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