The impact of defense spending on economic growth and the example of Turkey

The aim of this thesis is to test the relationship between defence expenditures and GDP in Turkey with time series analysis using annual data for the period 1990-2020. The dependent variable of the working model is real GDP. The independent variables are the GDP share of gross fixed capital formations, the share of defence expenditures in GDP, arms imports, arms exports, and the ratio of armed forces personnel to the total workforce. The study covers the period 1990-2020. As a result of the study, the Johansen-Juselius cointegration test revealed the existence of a long-term relationship between defence expenditures and GDP. In addition, no granger causality relationship was found between defence expenditures and GDP in the analysed period for Turkey. However, a bidirectional Granger causality relationship was obtained between defence expenditures and arms exports, and between arms exports and gross fixed capital formation.