Defense Expenditures and Socio-Economic Development in the Middle East and South Asia: A Factor Analytic Approach

Abstract

Introduction During the 1980s and into the 1990s there has been a slowdown in defense spending and arms imports in many developing countries, especially in Middle East, and to a lesser extent South Asia and Northern Africa (USACDA, 1994). In large part reductions in allocations to the military have been brought on by growing fiscal problems, forcing governments to reorder their spending priorities. It is apparent that for the developing world as a whole, countries are examining the potential benefits of reduced allocations to the military. Depending on the relative impact of defense spending, shifts in resources may significantly affect the economic performance of these countries (Chan, 1885, 1987).