Arms Imports and Third World Growth in the 1980s
Abstract
During the 1980s both defense spending and arms imports declined in
many developing countries (DCs), especially in the Middle East and to
a lesser degree in South Asia and Northern Africa1
• In large part, the reductions in defense allocations resulted from growing fiscal problems
which forced governments to reorder their spending priorities. It is
apparent for the developing world as a whole that countries are indeed
examining the potential benefits of reduced defense allocations.
Depending on the relative impact of defense spending, the concomitant
resource reallocation may significantly affect the economic performance
of these countries. This paper examines whether future "peace
dividends" are likely to stimulate or to retard third world economic
growth. To do this, we examine whether (a) military spending and
arms imports helped or hindered growth in the 1980s, (b) military
spending/arms imports were associated with changes in external debt,
and (c) military expenditures impacted uniformly between groups of
countries. We hypothesize that DCs will exhibit large variations in
how defense spending has impacted economic performance. In turn
these variations, it is believed, reflect the underlying health of the
individual country, i.e., its ability to absorb the. potential adverse
effects associated with changes in defense spending patterns.
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