The impact of security threats on defense expenditures: The case of the Organization of Turkic States

This study examines the impact of security threats on defense expenditures in four member states of the Organization of Turkic States (Azerbaijan, Kazakhstan, Kyrgyzstan, and Turkey). Using data covering the period 2007–2022, the analysis employs the QRPD (Quantile Regression for Panel Data with Nonadditive Fixed Effects) method developed by Powell (2022). In addition, the KRLS (Kernel Regularized Least Squares) method is applied as a robustness check. The study also investigates the effects of government expenditures, population growth, trade openness, democratization, and natural resource rents on defense spending. According to the QRPD findings, security threats positively affect defense expenditures in the Organization of Turkic States across low, medium, and high quantile levels. As security threats increase in these four countries, defense spending also rises. Furthermore, in all quantile levels, higher government expenditures and greater natural resource rents are associated with increased defense spending. In contrast, democratization, population growth, and trade openness reduce defense expenditures at low, medium, and high quantile levels. The KRLS results largely support the QRPD findings. Finally, policy recommendations are presented based on the empirical results obtained in the study.