THE EFFECT OF DEFENSE EXPENDITURES ON ECONOMIC GROWTH: THE CASE OF TURKEY (2002-2019)

Abstract

The relationship between defense expenditures and economic growth has been an important field of study by researchers in recent years. Studies have examined the effect of defense expenditures on economic growth, theoretically and empirically, from different perspectives. The aim of this study is to examine the effect of Turkey's defense expenditures on economic growth after the 2000 and 2001 economic crises, based on the data between 2002-2019. In the study, firstly, the definitions of defense expenditures and economic growth are given. Then, the theories determining the effects of defense expenditures on economic growth and selected examples from studies conducted in Turkey and the world based on these theories are given. At the end of the study, the model was established using data from Turkey between 2002-2019. With the established model, the data were analyzed with stationarity analysis, cointegration analysis and causality analysis. As a result of the tests and analyzes, it was determined that there is a long-term relationship between the variables. It has been determined that economic growth decreases when defense expenditures increase in the long term. In other words, it has been determined that there is a long-term negative relationship between defense expenditures and economic growth. This situation has revealed that the Neo-classical Theory can be valid in Turkey.