Factors influencing defense expenditures - a Hungarian perspective

Abstract

This thesis attempts to explore the economic, political and military factors influencing defense expenditures in general and in particular for the case of Hungary. The description of the empirical models leads to an analysis of the Hungarian defense expenditures and a forecast of the tendency of Hungary's military spending in the near future. The level of defense expenditures is a function of at least two variables: how threatened a government (or a society) feels and how much security that government (or country) can afford. Therefore, the determinants of defense spending stem from a combination of security policy (dealing with threats to vital national interests) and fiscal policy (the allocation of societal resources). Economic strength is a factor contributing to the determination of military spending. Another significant driving force behind military spending is the power and leverage of the armed forces relative to other national actors. The degree of transparency in military outlays is also important The size of the military budget is conditioned by geo-strategic concerns both at the regional and international levels. Finally, increases in military ex expenditures reduce the availability of funds for socio-economic development projects (guns vs. butter trade off)