The effect of defense spending on economic growth: An aplication on selected country groups (1993-2017)

The first study to Show that defense spending effects on economic growth is the works of Benoit in 1973 and 1978 years. Defense spending is important both in ensuring the security of the country against internal and external threats and economically. As a result the share of defense expenditures in the country's gross domestic product has been increasing recently. Defense expenditures can be defined as a part that is seperated from public expenditures for defense services. Economic growth is one of the most important factors of power and success for countries. Therefore, the issue that the economist are mostconcerned about is the relation between defense spending and growth. When the literatüre on defense expenditures is examined, it is clear that there is no consensus. The Studies have been handled in any country or country group within framework of Military Keynesian approach. As a result, it was tried to be obtained by Co-İntegration analysis Whether defense spending effects growth positively or negatively and whether there is a relationship between defense expenditures and economic growth. In this thesis study, the first 15 countries that made the most defense expenditures for the perriod 1973-2017; all 15 countries, the countries that gave foreign trade deficit in the defense industry were analyzed by Panel Data Analysis in the three different models. As a result while the Military Keynesian Approach 15 valid in the countries that give foreign trade surplus in the defense industry, The Neo- Classical Approach is valid in the countries the give foreign trade deficit in the defense industry. Turkey is also on the Neo-Classical approach. There is no long-term relationship between defense spending and economic growth in the 15 country groups and in the country group which has a foreign trade deficit in the defense industry. It is concluded that there is a long-term relationship between defense expenditures and economic growth in the countries that give foreign trade surplus in the defense industry and this relaionship is positive and meaning ful. Therefore, it can not be concluded that the economic growth of every country with high defense spending is also high. For this reason the countries should be grouped according to the most approriate criteria.