Defense Expenditures and Economic Performance in South Asia: Tests of Causality and Interdependence

Abstract

The growth in world military expenditure is the supreme paradox of our age. While it is reasonable and prudent for a nation to make provision for security against external threats, one nation's security is likely to be another's insecurity. As a result, particularly in an atmosphere of hostility and suspicion, military expenditure assumes a competitive dynamic. The net result is a reduction in security for all nations. The realization that this bizarre process consumes huge quantities of resources with high opportunity cost in terms of the possibility of achieving higher standards of living is only slightly less disquieting (Treddenick, 1985: 77).