Does Iran's Economy Benefit from a Reduction in Defense Budgets?

Document Type : a

Authors

1 d

2 a

Abstract

One of the fundamental questions in Defense Economics is whether the defense sector help to the process of economic growth and, or vice versa, leads to slowing economic growth. On the other hand, empirical evidence shows that the effect of increasing defense budgets on economic growth is not as diminished (asymmetric effect). In this regard, this paper tries to answer the question whether Iran's economy benefits from a reduction in defense budget? For this purpose asymmetric co-integration tests were used and data were collected from 1979-2016. The results of the model estimation using Nonlinear Autoregressive Distributed Lag (NARDL) show that in the short and long run, the positive and negative impacts of defense budget increase the economic growth, but the effect of negative impacts is greater than positive impacts (confirmation of asymmetric effects). On this basis, it can be said that reducing the defense budget and allocating more public expenditure to other non-defense sectors could lead to more accelerated economic growth. Of course, this result is taken only by considering the economic dimension of defensive expenditures and the decision on these expenditures should also be taken into account with regard to the political and security dimensions. According to other results, labor force growth rate, physical capital and oil export share of non-oil exports have a negative, positive and negative effect on economic growth, respectively.

Keywords


دیزجی، منیژه؛ پناهی، حسین و تقی‌زاده، حجت (1388). اثر هزینه‌های نظامی بر بدهی‌های خارجی در کشورهای درحال‌توسعه، فصلنامه مدلسازی اقتصادی، سال سوم، شماره 1، صص 136-117. 
کریمی پتانلار، سعید و باجلان، علی اکبر (1393). اثر سهم مخارج بودجه‌ای نظامی بر رشد اقتصادی در ایران، فصلنامه پژوهش‌های اقتصادی ایران، شماره 61، صص 82-63.
گل‌خندان، ابوالقاسم (1393). بررسی و مقایسه تطبیقی تأثیر هزینه‌های نظامی یر رشد اقتصادی کشورهای درحال‌توسعه و توسعه‌یافته منتخب، فصلنامه تحقیقات توسعه اقتصادی، شماره 15.
گل‌خندان، ابوالقاسم (1394الف). تعیین سطح بهینه‌ی بخش دفاعی در ایران از منظر اقتصادی، فصلنامه مدیریت نظامی، شماره 60، صص 212-176.
گل خندان ابوالقاسم (1394ب). تأثیر تکانه‌های مثبت و منفی قیمت نفت بر شاخص قیمت سهام در ایران (آیا این اثرگذاری نامتقارن است؟ فصلنامه سیاست‌های مالی واقتصادی، ۴ (۱۵)، صص 1189.
گل‌خندان، ابوالقاسم (1395). برآورد تابع تقاضای مخارج دفاعی در ایران، فصلنامه علوم و فنون نظامی، شماره 36، صص 55-29.
گل‌خندان، ابوالقاسم (1396). تحلیل پویای رابطه منابع طبیعی و نظامی‌گری در کشورهای خاورمیانه، فصلنامه مطالعات راهبردی سیاستگذاری عمومی، شماره 22، صص 37-19.
گل‌خندان، ابوالقاسم. (1398). گزیده‌ای از موضوعات در علم اقتصاد دفاع (تقرب تجربی). جلد دوم، تهران، انتشارات نارون دانش.
گل‌خندان، ابوالقاسم؛ خوانساری، مجتبی و گل‌خندان، داود (1394). نظامی‌گری و رشد اقتصادی: شواهدی تجربی از کشورهای منطقه منا در قالب الگوی پانل‌پویا، فصلنامه رشد و توسعه اقتصادی، شماره 18، صص 50-31.
مولایی، محمد؛ گل‌خندان، ابوالقاسم و گل‌خندان، داود (1393). رابطه مخارج دفاعی و رشد اقتصادی در ایران، فصلنامه راهبرد اقتصادی، شماره 9، صص 99-73.
Ahad, M. & Dar, A.A. (2017). Modelling the asymmetric impact of defence spending on economic growth: Evidence from non-linear ARDL and multipliers, Journal of Economic and Administrative Sciences, ISSN: 1026-4116.
Aizenman, J. & Glick, R. (2003). Military Expenditure, Threats and Growth. NBER Working Paper, 9618, Massachusetts.
Alam, M.I. & Quazy, R.M. (2003). Determinant of Capital Flight: An Econometric Case Study of Bangladesh, Review of Applied Economics, 17, 85-103.
Banerji, A., Dolado, J., Galbraith, J.W. & Hendry, D.F. (1993). Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data, Oxford University Press.
Barro, R J. & Sala-i-Martin, X. (1995). Economic Growth. The MIT Press.
Daddi, P., D'agostino, G., Pieroni, L., & Steinbrueck, E.  (2014). Does military spending stimulate growth? An empirical investigation in Italy, MPRA Paper, No. 58290.
Davarajan, S. (1996). the composition of public expenditure and economic growth, Journal of Monetary Economics, 37, 313-344.
Dunne, P. & Nikolaidou, E. (2012). Defense Spending and Economic Growth in the EU15, Defense and Peace Economics, 23)6(, 537-548.
Dunne, P., Smith, R. & Willenbockel, D. (2005). Models of Military Expenditure and Growth: A Critical Review, Defense and Peace Economics, 16)6(, 449-461.
Golkhandan, A. (2019). Defense Spending and Economic Growth in Iran: Evidence from Co-integration Analysis, 5th International Conference of Modern Research in Management, Economics andDevelopment, University of Georgia.
Granger, C.W. & Yoon, G. (2002). Hidden Co-integration, University of California, Working Paper.
Hatemi-J, A., Chang, T., Chen, W.Y., Lin, F.L.  & Gupta,  R.  (2018). Asymmetric causality between military expenditures and economic growth in top six defense spenders. Quality & Quantity, 52(3), 1193-1207.
Knight, M., Loayza, N. & Villanueva, D. (1996). The Peace Dividend: Military Spending Cuts and Economic Growth, IMF Staff Papers, 43, 1-44.
Kollias, C., Paleologou, SM., Tzeremes, P. et al. (2017). Defence expenditure and economic growth in Latin American countries: evidence from linear and nonlinear causality tests, Latin American Economic Review, 26: 2.
Mowlaei, M. & Golkhandan, A. (2015). Dynamic Analysis of the Impact of Military Expenditure on Economic Growth in Oil and Non-Oil Countries in the Middle East, Iranian Economic Review, No. 19, 233-250.
Myo, K.M. (2013). Military Expenditures and Economic Growth in Asia. Annual International Conference on Economics and Security, Stockholm International Peace Research Institute (SIPRI), 1-50.
Narayan, P.K. & Narayan, S. (2004). Estimating Income and Price Elasticity's of Imports for Fiji in a Co-integration Framework, Economic Modeling, 22, 423-438. 
Narayan, P.K. & Smyth, R. (2009). A Panel Data Analysis of the Military Expenditure-External Debt Nexus: Evidence from Six Middle Eastern Countries, Journal of Peace Research, 235-250.
Pesaran, M.H., Shin, Y. & Smith, R.J. (2001). Bounds testing approaches to the analysis of level relationships, Journal of Applied Econometrics, 16(20), 289–326.
Phiri, A. (2017). Does Military Spending Nonlinearly Affect Economic Growth in South Africa? Defense and Peace Economics, 4(1), 19-32.
Raju, M. H. & Ahmed, R. (2019). Effect of military expenditure on economic growth: evidences from India Pakistan and China using cointegration and causality analysis, Asian Journal of German and European Studies, 4(3).
Schorderet, Y. (2003). Asymmetric Cointegration, University of Geneva.
Shin, Y., Yu, B. & Greenwood-Nimmo, M. (2011). Modeling Asymmetric Co-integration and Dynamic Multipliers in a Nonlinear ARDL Framework, Mimeo.
Stroup, M.D. & Heckelman, J.C. (2001). Size of the Military Sector And Economic Growth: A Panel Data Analysis of Africa and Latin America. Journal of Applied Economics, IV (2), 329-360.
Wijeweera, A. & Webb, M.J. (2011). Military Spending and Economic Growth in South Asia: A Panel Data Analysis, Defense and Peace Economics, 22(5), 545-554.
Yildirim, J., Ocal, N. & Keskin, H. (2011). Military Expenditure, Economic Growth and Spatial Spillovers: A Global Perspective, International Conference on Applied Economics, 811-821.