Investigation of the macro-economic effects of defense industry expenditures on the Turkish economy

Defense services are of great importance for the security of countries. Due to its strategic location, Turkey is in a position where regional conflicts are experienced. Turkey attaches great importance to the defense industry in order to be strong in this region. While Turkey meets the needs of the defense industry through imports, it has also shown great progress in the domestic defense industry in recent years. The macroeconomic effects of the expenditures made for the defense industry are important for the country's economy. The aim of this study is to investigate the effects of defense expenditures on economic variables with other variables such as foreign debt GDP growth, trade balance, unemployment and inflation. Empirical analyzes were used for Turkey using time series data and Granger causality methodology. In line with the accessibility and explanatory nature of the data, the study covered the years between 1990 and 2017. The main implication of this study is that decision makers should not ignore the necessity of reducing defense expenditures in solving economic problems. If governments can reduce their defense expenditures, the released resources will be shifted to more productive areas that encourage the economic growth of countries, and thus problems such as foreign debt and unemployment may decrease. In this study, inflation and growth variables, in which causality is towards defense expenditures, come to the fore.