Maria Gabriel Acueva-Jiménez

Military Expenditure and Sustainable Economic Growth in Latin America.

Introduction

Military expenditure and sustainable economic growth in latin america.. Explores military expenditure's impact on sustainable economic growth & investment in 13 Latin American economies (1990-2019), revealing complex unidirectional causality.

Abstract

This research seeks to thoroughly examine the interconnectedness and directional influence between military spending and sustainable economic growth while considering the role of gross fixed capital formation (investment) as a controlling factor. Drawing on a comprehensive dataset from 13 distinct Latin American economies, spanning the extensive time frame of 1990 to 2019, the study investigates the patterns of cointegration and causal relationships within the variables. The results of the cointegration analysis do not provide substantial support for the existence of a strong and enduring relationship between all the examined variables over the long term. Notably, the research identifies a unidirectional causality running from (i) economic growth to military expenditure, (ii) economic growth to investment, and (iii) investment to military expenditure. This suggests a complex interplay between economic dynamics, investment patterns, and military spending behaviors in the context of Latin American economies, highlighting the need for a nuanced understanding of the underlying causal mechanisms at play. Moreover, it is necessary to consider national and international policies to promote sustainable development in countries, given it produces benefits for investment, safety, and security. As nations strive for sustained development, the research underscores the need for policymakers to grapple with the intricate implications of military expenditure on economic and investment landscapes. This holistic perspective advocates for a balanced and inclusive approach, cognizant of the multifaceted challenges and opportunities that characterize the evolving socio-economic and geopolitical landscape of the region.

Review

This research paper, titled "Military Expenditure and Sustainable Economic Growth in Latin America," undertakes an important investigation into the complex relationships between military spending, sustainable economic growth, and gross fixed capital formation (investment) across 13 Latin American economies from 1990 to 2019. The study's objective to examine interconnectedness and directional influence, particularly with investment acting as a controlling factor, is highly relevant given the region's socio-economic and geopolitical dynamics. Employing cointegration and causal analysis, the paper sets out to uncover long-term patterns and causal pathways that could inform policy decisions in a critical area of public finance and development. The findings present a nuanced picture. Contrary to expectations of a strong long-term equilibrium, the cointegration analysis does not provide substantial support for an enduring relationship between all examined variables. However, the causality analysis reveals significant unidirectional influences. Specifically, the study identifies causality running from economic growth to military expenditure, from economic growth to investment, and from investment to military expenditure. These results suggest a dynamic where economic prosperity influences both investment and military spending, and investment, in turn, impacts military outlays, underscoring a complex interplay rather than a simple linear relationship. The implications for policymakers are significant. The research highlights the need for a nuanced understanding of how economic dynamics, investment patterns, and military spending interact, rather than assuming direct or simplistic effects. The paper advocates for policymakers to consider national and international policies that promote sustainable development, emphasizing its benefits for investment, safety, and security. By calling for a holistic, balanced, and inclusive approach, the study underscores the intricate challenges and opportunities inherent in navigating the evolving socio-economic and geopolitical landscape of Latin America, urging a mindful approach to military expenditure in the pursuit of sustained development.

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