The analysis and evaluation of Turkish defense expenditures.

The aim of this study is to analyze the trend of the defense expenditure during the period 1924-2005 and the effects of those on the overall economy. First chapter begins with the definition and characteristics of the defense industry and goes on with the major determinants of the defense expenditures. This chapter, also, presents a review on the effects of the defense expenditures on the economic growth, employment, inflation and industrialization and an evaluation of global and regional trend of defense expenditures as well as that among NATO member countries. Second chapter deals with the factors and the sources of Turkish defense expenditures. The sources could be classified into four categories: budget, off-budgetary, foreign and others. The analysis and evaluation of Turkish defense expenditures are presented in the third chapter as sub-chapters of time series analysis of expenditures and the effects of expenditures on economy. Furthermore, Granger Causality Test that reveals the relationship between defense expenditure and economic growth is introduced in this chapter. Given the data of Turkey for the period of 1968-2005, the relationship between defense expenditure and economic growth is analyzed by means of Granger Causality Test. Consequently, the test shows that there is an one-way causality from defense expenditures through economic growth and should the defense expenditure grow up more than the economic growth, economic growth would be affected negatively.