Military investments and economic growth in developing nations

Using Ball's data set on the composition of LDCs' security expenditures, I demonstrate, first, that LDC arms-producing countries (APs) spent about twice as much on capital expenditures, as a percentage of total security spending, as the LDC non-arms-producing countries (NAPs) did. Second, evidence is presented to suggest that most of this capital spending is absorbed by the domestic economy and not lost as foreign exchange leakage. Third, military-capital investments in military industries are roughly in line with what is known about arms-production efforts in LDCs. These findings partially help explain why military expenditures in LDC APs might exert only a "muffed' effect on the economy as a whole. These results are valid exclusively in the comparative context from which they were derived. I suggest that relative to LDC NAPs the mitigated (negative) effect of military expenditures on economic growth in LDC APs might be due, in part, to military domestic investments. -from Author