THE ASYMMETRIC EFFECT OF DEFENSE EXPENDITURES ON ECONOMIC GROWTH

Abstract

Defense expenditures play a critical role in protecting countries' borders and providing security and stability within the country. However, the effect of these expenditures on economic growth is unclear in the literature. In the study, the effect of defense expenditures on economic growth was analyzed with the ARDL Bound Test and the Hatemi-J Asymmetric Causality Test over the 1987-2020 period in Turkey. The findings revealed that defense expenditures have a negative impact on economic growth. Besides, there is an asymmetric causality relationship between defense expenditures and economic growth. Turkey's geographical location and strategic importance cause it to increase the amount and composition of defense expenditures Therefore, it will be necessary for policymakers to consider efficiency in resource allocation when making decisions regarding defense expenditures. © 2022, Symmetrion. All rights reserved.