THE IMPACT OF MILITARY EXPENDITURES ON THE ECONOMIC GROWTH OF THE SELECTED SAARC COUNTRIES

Abstract

In this study we investigate the impact of military expenditures on the GDP growth of selected SAARC countries (Afghanistan,
Bangladesh, India, Nepal, Pakistan and Sri Lanka). For the mentioned aim we used the panel data for the period (2004-2017)
and for the estimation we used the FMOLS and DOLS methods of cointegrating regressions. For the short run and long run
causality we applied test vector error correction model and Wald test. The impact of military expenditures is positive but
insignificant and the impact of alternative variable which is gross fixed capital formation is positive and significant which
means using of resources in the military brings big opportunity cost with itself for the region.