Defense Expenditures and Savings in Pakistan: Do Allocations to the Military Reduce National Savings?
Looney, Robert E.
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Recent academic literature on defense expenditures stresses a number of potential tradeoffs between allocations to the military and key macroeconomic aggregates. However to date no systematic research'has been conducted on the links between defense expenditures and savings. Using Pakistan as a case study the analysis below examines whether defense expenditures have reduced that country's already low savings rates. Specifically: Is the impact of defense expenditures on savings different from that of other types of government expenditures and if so in what manner? The main finding of this paper is that there is little evidence that military expenditures in Pakistan have preempted domestic savings from the private sector or that these expenditures have reduced the country's rate of savings below its already low levels. Interestingly defense expenditures do appear to impact on domestic savings in a manner quite different from that of non-defense expenditures. On the other hand, non-defense expenditures may, in some instances, be a factor in retarding the mobilization of domestic resources.
Development and Savings, vol. XIX, no. 2, 1995.Refereed Journal Article
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