MILITARY EXPENDITURE, DEMOCRACY AND ECONOMIC GROWTH: A PANEL DATA ANALYSIS.

The present analysis sets itself in the context of the literature studying the effect of military expenditure on economic growth. The main goal of the study is to investigate the worldwide effect of military expenditure on growth, with particular emphasis on the relative impact of country configuration, identified as autocratic or democratic. The analysis is conducted over a panel database including observations for 110 countries during a time period of 26 years between 1993-2018. The research has been carried out exploiting different econometrics techniques: Fixed Effect, Instrumental Variables and Arellano-Bond GMM. The results highlight the presence of a global negative effect of military expenditure on growth. Moreover, the effect seems not to be homogeneous amongst all the countries. Indeed, there is evidence of a stronger detrimental influence of military expenditure on the growth of democratic countries compared to the one of autocratic countries.