Title

Military spending and economic growth in Sri Lanka: a time series analysis

Document Type

Article

Publication details

Wijeweera, A & Webb, MJ 2009, 'Military spending and economic growth in Sri Lanka: a time series analysis', Defence and Peace Economics, vol. 20, no. 6, pp. 499-508.

Published version available from:

http://doi.org/10.1080/10242690902868301

Peer Reviewed

Peer-Reviewed

Abstract

In this paper, we employ a VAR analysis to examine the nexus between military spending and economic growth in Sri Lanka which, due to the civil war there, has witnessed a significant increase in military spending over the last three decades while also recording healthy economic growth. The study finds that, compared with non‐military spending, military spending exerts only a minimal positive impact on real GDP. Over a 10‐year period, a 1% increase in non‐military spending increases GDP by 1.6%. In contrast, military spending only increases GDP by 0.05%, suggesting that the economic benefits for Sri Lanka from a sustained peace may be considerable.