Abstract:

Countries need to strengthen their defense services in order to maintain their independence. Accordingly, countries allocate a share from their budgets in order to meet the defense services. The part allocated for defense expenditures (DE) constitutes a large part of the public expenditures of the countries. In this study, it is aimed to investigate the relationship between defense expenditures and economic growth (EG) over the Middle East countries. For 9 Middle Eastern countries, a panel time series analysis was conducted with the data obtained to analyze the relationship between DE and EG in the time period between 1980 and 2019. With the obtained data, Konya (2006) bootstrap panel causality test, Westerlund (2006) panel cointegration test and Pesaran (2006) CCE cointegration estimator were applied. The empirical findings obtained as a result of the cointegration tests show that the variables of DE and EG act together in the long run, while the results of the causality test show that there is a bidirectional causality relationship in Kuwait and Iran countries. Finally, according to Pesaran (2006) CCE panel cointegration estimator, it has been determined that the relationship in question is negative for Kuwait and Egypt and the Military-Keynesian approach is valid for these countries, while the relationship is positive for other countries and the Neo-Classical approach is valid.

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