DEFENCE SPENDING AND ECONOMIC GROWTH IN SOUTHEAST ASIA : A COMPARATIVES STUDY

Abstract

The question of whether defence spending impedes growth constantly arises in the analysis of the relationship between defence spending and economic growth. This relationship is especially relevant for the Less Developed Countries (LDCs) in which the defence sector could compete away society's scarce resources from the other more efficient economic sectors. Hence, we attempt to determine the presence, if any, of the long run relationship between the two variables using data from six ASEAN countries. Generally speaking, we find no evidence to suggest any significance of this relationship in Malaysia and the Philippines. The evidence from Myanmar however suggests that a positive relationship exists. The evidence from Indonesia shows a weak negative relationship while the evidence from Singapore and Thailand is mixed as the different data sets exhibit different findings.