Military expenditure and economic growth in brics and mist countries: evidence from bootstrap panel granger causality analysis

Abstract

This paper investigates the causal relationship between military expenditure,economic growth, and real capital stock in BRICS (Brazil, Russia, India, China, andSouth Africa) and MIST (Mexico, Indonesia, South Korea, and Turkey) countries.For this purpose, the period from 1990 to 2013 is examined using with thebootstrappanel Granger causality method. Results show that there is cross-sectional­dependency­and­country-specific­heterogeneity­across­BRICS­and­MIST­countries.­It­is also concluded that a positive unidirectional causality from military expenditureto economic growth exists in China. By contrast, there is negative unidirectionalcausality from military expenditures to economic growth in Turkey. In addition,the­feedback­hypothesis­ is­ confirmed­for­Russia­and­the­neutrality­ hypothesis­is supported by the data from Brazil, India, Indonesia, South Korea, Mexico andSouth Africa.