optimal control and differential game models of military expenditure in less developed countries abstract this paper presents optimal control and differential game models of military expenditure in less developed countries we emphasise the strategic interconnections between aggressive neighbours and explicitly stress the optimal resource allocation problem between civilian and military expenditure a major innovation of the analysis is to analyse the asymmetric reaction functions of the two agents and the formalisation of the stylised fact that most ldc arms races have taken place between participants of unequal size

international scientist mobility and the locus of knowledge and technology transfer abstract despite the growing interest of scholars and policymakers to better understand the determinants for researchers in public science to transfer knowledge and technology to firms little is known how temporary international mobility of scientists affects both their propensity to engage in knowledge and technology transfer ktt as well as the locus of such transfer based on a sample of more than 950 german academics from science and engineering faculties we investigate how the duration and the frequency of scientists visits at research institutions outside their home country affect ktt activities we find that most mobile scientists engage in ktt to firms both in the host and in their home country suggesting that ktt activities to firms abroad do not substitute or crowd out but complement ktt to firms in the home country we further find that the longer research visits abroad are the higher the likelihood that scientists engage in ktt to firms again both in the host and the home country however the more frequently scientists visit institutions abroad the more likely they are to engage in ktt to firms only in their home country our results therefore provide evidence for the benefits of brain circulation the article contributes to the growing strand of the literature on scientist mobility and on the determinants of industry science linkages at the individual level

finance and the sources of growth at various stages of economic development this article studies the effects of financial development on the sources of growth in different groups of countries recent theoretical work shows that financial development may affect productivity and capital accumulation in different ways in industrial versus developing countries this hypothesis is tested with panel data from 74 countries using gmm dynamic panel techniques results are consistent with the hypothesis finance has a strong positive influence on productivity growth primarily in more developed economies in less developed economies the effect of finance on output growth occurs primarily through capital accumulation jel o4 g1

government purchases and real interest rates this paper examines the dynamic impact of government purchases in a simple general equilibrium model with both durable and nondurable consumer goods as well as productive capital the model generates perhaps surprising results in particular increases in government purchases are shown to cause reductions in real interest rates the model thus provides a possible explanation for the observed behavior of real interest rates around wars copyright 1987 by university of chicago press

growth and defense pooled estimates for the nato alliance 1951 1988 in two provocative and influential contributions emile benoit 4 5 uncovered a net positive association between defense spending and economic growth for 44 less developed countries ldcs during the 1950 65 period apparently a larger defense burden as measured by the share of national income devoted to defense may have promoted growth for these countries this finding was controversial and generated an extensive literature that either found fault with benoit s methodology or else investigated the relationship between growth and defense with alternative methodologies one such methodology relied on an aggregate production function to derive an equation for the sources of growth owing to technological change labor growth investment productivity differences among sectors and externalities this supply side approach was associated with feder 13 and ram 22 when a feder ram model was used researchers typically discovered either a small positive effect or else no impact of defense on growth except for alexander 1 the feder ram approach has been applied to large cross sections of ldcs to cross sections of ldcs and developed countries or to individual countries over time the purpose of this paper is fivefold first we extend the three sector feder ram model to allow for the influence of defense spillin externalities as the defense expenditures of a nation s allies affect the nation s own defense and civilian sectors in either a positive or negative fashion spillin externalities can stem from input complementarity or substitutability procurement practices joint ventures or operational considerations second we check the data for unit roots and when appropriate cointegration these tests help us to avoid a dynamic misspecification third we estimate a three sector feder ram growth equation for each of ten nato allies for the 1951

public expenditures and growth the article explores the effects of public expenditures on growth among 73 countries over the 1970 89 period while much of the literature attributes weak growth to public investment and social expenditures which inhibit growth through crowding out and rent seeking the article highlights the contributions that public investment and social expenditures may make to growth the article s econometric analysis suggests that crowding out and rent seeking concerns may have been overstated in the literature

economic development and defense expenditure developing countries spend large amounts of scarce resources on military expenditure the effect of defense spending on economic growth and development is an important topic and merits close scrutiny from development economists the main purpose of this paper is to analyze the interrelationships among defense burden saving and economic growth within the context of a fully specified empirical model since benoit s seminal work published in this journal and elsewhere started the recent debate and controversy it is necessary to discuss his findings in some detail benoit made a forceful and interesting case for the existence of a causal relationship between defense expenditure and growth in less developed countries ldcs his main hypothesis was that defense burden is positively correlated to growth rates in ldcs furthermore the chain of causation is such that a high defense burden causes the growth rate to rise defense helps development policy implications of such a hypothesis are then spelled out the purpose of this section is to evaluate benoit s thesis and critically analyze its conclusions the main finding is that for a large sample of 44 countries there exists a positive correlation between rate of growth and defense burden defense expenditure as a proportion of national income benoit used the growth rate of nondefense civilian output for the index of growth to avoid the criticism of double counting there is an interesting definitional question that arises regarding the variables used by benoit here he defined growth in civilian output as growth in gdp minus growth in defense spending all in real terms defining gdp as y civilian output as v and defense spending as d we may write

military spending and stochastic growth abstract this study examines capital accumulation military spending arms accumulation and output growth in a stochastic endogenous growth model the analysis shows that higher lower growth in foreign military spending leads to faster slower economic growth in the home country if the home country s intertemporal substitution elasticity in consumption is smaller larger but more volatility in foreign military spending can lead to higher economic growth in the home country when its intertemporal substitution elasticity is large in addition shocks to output production may stimulate economic growth

on the impacts of anticipated carbon policies a dynamic stochastic general equilibrium model approach abstract this paper examines the environmental and welfare impacts of pre announced carbon policies using an environmental dynamic stochastic general equilibrium e dsge model we find that pre announcing a rise in the carbon tax rate could reduce co2 emissions but would decrease output and investment during the interim period between the announcement and implementation dates pre announcing an increase in the carbon tax rate from 1 to 5 1 and 3 years in advance could reduce the quarterly aggregate consumption by 0 081 and 0 114 respectively compared to carbon taxation pre announcing a tightening carbon intensity target could reduce co2 emissions even more while pre announcing a tightening carbon capacity target under a cap and trade regime has no such co2 reduction effect in a welfare analysis we show that an unanticipated rise in the carbon tax rate is more preferable to the 1 year 2 year and 3 year ahead announcements the intensity regime produces a greater welfare than the cap and trade regime which is in turn better than the carbon taxation regime

understanding international trade policies an emerging synthesis the international trade problems of the 1980s stimulated an expansion of scholarship on trade policies by economists and political scientists at least four distinct theoretical perspectives weave their way through recent literature that concentrates on the united states emphasizing market conditions policy beliefs and values national political institutions and global structures respectively new studies in each of these traditions advance beyond the work of their predecessors but none of the perspectives has yet proved adequate as a single unifying vehicle nevertheless we can also see clear movement toward a synthesis with single works blending insights from several traditions thus the books under review do not all fall neatly into the familiar exclusive categories of economics or political science the emerging synthesis needs strengthening in several ways including the development of conditioning hypotheses that will reduce remaining apparent confusions

the financial development and growth nexus a meta analysis this is the accepted manuscript the final version is available from wiley at http onlinelibrary wiley com doi 10 1111 joes 12086 abstract

financial development and economic growth a meta analysis we analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth taken together the studies imply a positive and statistically significant effect but the individual estimates vary widely we find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results studies that do not address endogeneity tend to overstate the effect of finance on growth while the effect seems to be weaker in less developed countries the effect decreases worldwide after the 1980s our results also suggest that stock markets support faster economic growth than other financial intermediaries

anticipated foreign military threat arms accumulation and the current account in a small open economy this paper examines the effects of an anticipated foreign military threat on consumption the home weapons stock and net foreign asset position in a small open economy if the utility function is separable between butter and guns the economy decreases both butter and guns when the news arrives accumulates foreign assets prior to the foreign threat realization and increases guns as the foreign threat realizes if the utility function is nonseparable between butter and guns the economy may have two dynamic responses the first is similar to the separable case except that consumption exhibits a discrete jump when the foreign threat realizes the second is that the economy increases both butter and guns on impact decumulates foreign assets prior to the foreign threat implementation but either increases or decreases guns as the foreign threat realizes

the impact of military burden on long run growth and welfare abstract this paper presents an endogenous growth model to examine how a government s resource allocation between the defense and non defense sectors will govern both economic growth and social welfare we demonstrate that there exists an optimal defense expenditure share that maximizes the economic growth rate but this rate is smaller than the welfare maximizing share this result can be viewed as a possible vehicle to explain why in many developing countries arms limitation and disarmament negotiations usually have low performance even failing

modeling the defense growth nexus in guatemala summary the defense growth nexus is investigated empirically using longitudinal data for guatemala and allowing the effect of defense spending on growth to be nonlinear using recently developed econometric methods involving threshold regressions evidence of a level dependent effect of military expenditure on gdp growth is found a positive and significant externality effect of defense spending prevails for relatively low levels of defense spending and becomes negative albeit insignificant for higher levels

is the relationship between financial development and economic growth monotonic evidence from a sample of middle income countries summary we revisit the relationship between financial development and economic growth in a panel of 52 middle income countries over the 1980 2008 period using pooled mean group estimations in a dynamic heterogeneous panel setting we show that there is an inverted u shaped relationship between finance and growth in the long run in the short run the relationship is insignificant this suggests that too much finance can exert a negative influence on growth in middle income countries the finding of a non monotonic effect of financial development on growth is confirmed by estimating a threshold model

human capital depletion human capital formation and migration a blessing or a curse abstract we specify conditions under which a strictly positive probability of employment in a foreign country raises the level of human capital formed by optimizing workers in the home country while some workers migrate taking along more human capital than if they had migrated without factoring in the possibility of migration a form of brain drain other workers stay at home with more human capital than they would have formed in the absence of the possibility of migration a form of brain gain

research upon return the effect of international mobility on scientific ties production and impact abstract highly skilled return migrants contribute to the establishment of ties between the home and host systems this paper studies how the professional ties which argentinean researchers built up during the time spent in foreign research systems influence their collaboration patterns and their research outputs upon return it confirms the expectation that having foreign work experience helps to explain the propensity to co publish internationally and it also shows that researchers collaborate to a higher degree with their former host system another central finding is that foreign work experience has a positive effect on the propensity to publish in journals with a high impact factor additionally a large share of this type of research is published without international co authorship we therefore do no not find evidence of a lack of publication autonomy in the case of argentinean returnees

brain drain and human capital formation in developing countries winners and losers using new data on emigration rates by education level we examine the impact of brain drain migration on human capital formation in developing countries we find evidence of a positive effect of skilled migration prospects on gross human capital formation in a cross section of 127 countries for each country of the sample we then estimate the net effect of the brain drain using counterfactual simulations countries combining relatively low levels of human capital and low emigration rates are shown to experience a beneficial brain drain and conversely there are more losers than winners and the former tend to lose relatively more than what the latter gain

interest rate reforms financial deepening and economic growth in cameroon an empirical investigation the impact of interest rate reforms on financial deepening and growth in cameroon is examined we employ five proxies of financial deepening against deposit rate a proxy for interest rate reforms the impact of interest rate reforms on financial deepening is sensitive to the proxy used for financial deepening the impact is almost negative and significant for all the indicators except for the ratio of broad money to gross domestic product where it is positive and significant in the first lag this means that financial repression helps improve broad money and hinders the development of the other indicators of financial development in cameroon

economic growth and the defense burden in africa and latin america simulations from a dynamic model since e benoit first provided evidence of a link between the rate of economic growth and defense spending a number of scholars have reported their research on the subject their results have been varied some concluding the relationship is positive others concluding the opposite recently some have argued that no general and significant link exists for less developed countries ldcs and have suggested that the varied results are due primarily to varied specifications sample periods and differences among countries 2 s chan goes further by suggesting that researchers deemphasize the search for universal links and concentrate on time series as opposed to cross section analysis he also recommends that explanations of the defense spendingeconomic growth link take into account among other things a country s capacity utilization total foreign receipts and fiscal and monetary policies 3 the point of departure for the research reported here is a paper by r faini p annez and l taylor hereafter faanta 4 their analysis concludes that higher defense burdens are associated with lower growth rates across countries however i will argue that they have either misstated or misinterpreted their primary result and furthermore that there are some serious problems with their analysis and the underlying model these problems aside the faanta model either already includes or can be respecified to include most of the features recommended by chan therefore i will estimate a significantly modified version of their model for african and latin american countries after attempting to replicate their results for these two regions simulations of my model lead to the conclusion that maintaining a larger defense

military expenditures and economic growth in less developed countries an augmented model and further evidence a study of the impact of military expenditures on economic growth and development examines the differences in the results of previous studies which led to contradictory conclusions the authors find that these differences are due to sample variations specificational choices and the different time periods examined the data indicate that there is no consistent statistically significant connection between military spending and economic growth augmentation of the models suggests that military expenditures neither help nor hurt economic growth to any significant extent 2 tables

sizing up the peace dividend economic growth and military spending in the united states 1948 1996 with cold war expenditure no longer needed our gigantic government expenditures abroad could be reduced and our international deficit would probably disappear almost overnight with the dollar no longer overvalued militant expansion of monetary and credit policy could stimulate capital formation or investment to utilize the resources released from armament production america s potential and actual growth rate far from depending upon war preparations would be markedly increased by an end to the cold war paul samuelson economics an introductory analysis

financial development and economic growth international evidence the importance of the relationship between financial development and economic growth has been well recognized and emphasized in the field of economic development 1 although recent writings on this subject seem to accept the hypothesis that financial development is crucial for successful economic growth 2 patrick asked the critical question which sector financial or real leads in the dynamic process of economic development patrick identified two possible patterns in the causal relationship between financial development and economic growth in the first growth induces an expansion of the financial system 3 according to this view called demand following the lack of financial growth is a manifestation of the lack of demand for financial services as the real side of the economy develops its demands for various new financial services materialize and these are met rather passively from the financial side in the second pattern the expansion of the financial system precedes the demand for its services channeling scarce resources from small savers to large investors according to relative rates of return the financial sector precedes and induces real growth the deliberate establishment and promotion of financial institutions in many less developed countries ldcs might reflect this belief in the supply leading relationship between the two developments a natural question then concerns the direction of causality between financial development and economic growth patrick asserted that the direction of causality changes over the course of development in his view financial development is able to induce real innovation type investment before sustained modern economic growth gets under way and as the process of real growth occurs the supply leading impetus gradually becomes less important and the demand following financial response

defense expenditures and national well being the existence of a trade off between military expenditures and social spending is widely hypothesized but often difficult to establish empirically this article constructs a model to test the effects of changes in military spending on federal expenditures for health and education from 1941 through 1979 important economic demographic and political changes are controlled no systematic tradeoff between military spending and federal health and education expenditures is found nor in this period was there any significant depressing effect on health and education expenditures by republican presidential administrations thus the current reagan administration under which there are major increases in military spending and major cuts in health and education spending emerges as exceptional

a survey of recent developments in the literature of finance and growth this paper provides a survey of the recent progress in the literature of financial development and economic growth the survey highlights that most empirical studies focus on either testing the role of financial development in stimulating economic growth or examining the direction of causality between these two variables although the positive role of finance on growth has become a stylized fact there are some methodological reservations about the results from these empirical studies several key issues unresolved in the literature are highlighted the paper also points to several directions for future research

defense spending economic structure and growth evidence among countries and over time there is no way of telling from economic theory whether a greater military effort will slow down or accelerate output growth the results of a single empirical study have been used to support the widely held belief that in poor countries a high share of defense in gdp is associated with a high growth rate this paper shows that as is often the case such conventional wisdom is wrong across countries a greater defense burden is associated with slower growth in a regression equation estimated for 69 countries over some or all of the period 1952 70 an increase of 10 percentage points in the defense burden share of defense in gdp leads to a reduction of annual growth by 0 13 a nontrivial loss as we discuss in detail below growth retardation to approximately the same extent also is recorded in regional regression estimates though precise coefficients differ from area to area besides slowing the growth rate a changing defense burden has other macroeconomic effects for the same sample of countries and time period increases in military spending are associated with lower saving and investment shares in gdp a greater tax burden and a shift in economic activity from agriculture including food production toward the manufacturing sector when estimated econometrically the extent to which defense spending replaces investment is consistent in magnitude with the growth rate reductions mentioned above in describing these results more thoroughly in section i we review informally the channels through which arms spending can affect the growth rate and present a simple formal model in section ii the resulting reduced form equation is estimated empirically in section iii with the findings summarized above to measure other effects of military outlays on the economic structure we go on in section iv to incorporate the defense burden into the regression equations and data

the impact of military technology transfer on economic growth international evidence the purpose of this article is to measure the impact of military technology transfer on economic growth for 67 selected countries during the period 2000 to 2005 through the application of the malmquist productivity index which is broken down into efficiency change and technical change our main findings are as follows first technology diffusion is all pervading in half of the sampled countries due to pure efficiency and scale efficiency changes second a higher income level and an excess of arms imports lead to innovative activities third middle income countries have higher efficiency and pure efficiency changes these contribute to higher total productivity change finally after separating the impact of capital investment from that of arms imports the diffusion of military technology has a more positive and substantial impact on economic growth thereby revealing the presence of externalities between countries

guns versus butter the indirect link studies of the guns versus butter trade off found no evidence for the existence of a trade off in the pre reagan era see russett 1982 domke eichenberg and kelleher 1983 mintz 1989 this study extends prior research by examining not only the direct immediate effects of defense spending but also the indirect impact of arms expenditures on education spending a three equation model is specified and empirically estimated using data from 1953 to 1987 the results show no negative short term effects but do show significant indirect long term trade offs

a dynamic model of capital and arms accumulation how does competitive arms accumulation affect investment and capital accumulation in a dynamic optimization framework including both investment and military spending we find that when the utility function is separable between consumption and the weapon stocks an unanticipated rise in current military threat reduces current investment and an anticipated rise in future military threat stimulates current investment but when the utility function is nonseparable between consumption and the weapon stocks a current military threat may not decrease the short run investment in the long run capital accumulation is independent of the military conflicts among countries regardless of the form of the utility function

is there a first mover advantage in science pioneering behavior and scientific production in nanotechnology this article investigates whether pioneers in a research field have a sustainable first mover advantage in publications combining bibliometric publications citations co authorship with survey data on 495 nanotechnology researchers we analyzed career attributes professional context and production overtime our econometric estimates highlight two main results first pioneering behavior is not exogenous it is more probable among scientists who are already established in their mother discipline before entering nanotechnology have a strong collaboration network and have easy access to field specific resources second even after controlling for the endogeneity of entry timing we find a strong first mover advantage pioneers in the emerging field exhibit significantly higher scientific production in that field in the long run

incumbent positioning as a determinant of strategic response to entry existing research has identified different firm characteristics that determine an incumbent s reaction toward market entrants this study widens the perspective from a firm s absolute attributes to its relative positioning within its competitive environment the hypotheses for the empirical analysis are derived from game theoretic models with either vertical or horizontal product differentiation in each of the two theoretical models two incumbents initially choose very different quality and variety levels respectively and move closer to the center when faced by entry of a competitor from the vertical differentiation model we predict a stronger price reduction by high quality firms in our empirical analysis we are using a novel dataset of the high quality restaurant market in germany to test the theoretical findings while the hypotheses with respect to adjustments of prices and varieties are supported we do not find empirical evidence for the predicted quality adjustment

the effects of environmental quality misperception on investments and regulation abstract this paper analyzes whether consumers misperception on the quality of the product influences firms investment choices we examine a setup with horizontal and vertical green differentiation where consumers are heterogeneous in the exogenous perception of environmental quality demands true qualities and profits are increasing in the perception of higher quality while the investment in green quality is high for high and low degrees of product substitutability we further consider the introduction of either an emission tax or an environmental standard both interventions increase the investment in green quality we show that for low marginal damages the environmental standard increases quality while taxation is more effective when the environmental damage is large

evidence from time series on militarizing the economy the case of iraq robust evidence is provided of causality between defence spending and economic growth in the case of iraq over the period 1950 to 1980 the findings of other studies are questioned studies that use the procedure of differencing the yearly data prior to testing for causality this is because the differencing procedure destroys any long run economic information therefore such studies arrive at the wrong conclusions

alternative econometric approaches for analysing the role of the financial sector in economic growth time series evidence from ldcs abstract the study determines and analyses the effects of financial intermediation on the growth of real gdp in ldcs by employing annual data for 71 countries over varying periods that generally span the 1960s and 1980s based on the modified version of the orthodox model framework and an entirely new model framework that recognizes the external effects of the financial sector on the real sector as well as effects of the financial sector on the productivities of factor inputs engaged therein we estimate regression equations for each country our findings are as follows a financial intermediation promotes economic growth in about 85 of the countries b as compared with factors that have often been emphasized in the literature viz export expansion capital formation ratio and labour force growth as important growth promoters financial intermediation is practically at par with export expansion and capital formation ratio and superior to labour force growth as partners in promoting economic growth c the growth promoting effects of financial intermediation are more predominant in low income than in high income ldcs and d the growth promoting effects of financial intermediation are practically invariant across the various regions of the globe

the link between life insurance activities and economic growth some new evidence abstract this paper applies the panel seemingly unrelated regressions augmented dickey fuller suradf test to re investigate the stationarity properties of real life insurance premiums per capita and real gross domestic product gdp per capita for 41 countries within three levels of income covering 1979 2007 our empirical results first reveal that the variables in these countries are a mixture of i 0 and i 1 processes and that the traditional panel unit root tests could lead to misleading inferences second for the estimated half lives the degrees of mean reversion are greater in high income countries third there is concrete evidence favoring the hypothesis of a long run equilibrium relationship between real gdp and real life insurance premiums after allowing for the heterogeneous country effect the long run estimated panel parameter results indicate that a 1 increase in the real life premium raises real gdp by 0 06 finally we determine that the development of life insurance markets and economic growth exhibit long run and short run bidirectional causalities these findings offer several useful insights for policy makers and researchers

the determinants of military expenditures in developing countries abstract this paper first discusses the results of various quantitative studies of the impact of military spending on economic growth in developing countries it concludes that there is little doubt that this impact is generally negative the paper then proceeds to consider the main factors influencing the level of military expenditure itself the analysis is developed from a conceptual matrix covering the national regional and global levels each being divided into political military and economic aspects the quantitative analysis based on cross country regressions for the period 1978 to 1980 indicates that differences among developing countries in the relative size of their military burdens reflect a complex of factors both domestic regional and global and both political military and economic

optimal investment and uncertainty on china s carbon emission abatement abstract to realize environmentally sustainable development of the economy china has decided to cut carbon dioxide emissions per unit of gdp by 40 to 45 percent by 2020 compared with the level in 2005 based on china s emission abatement target this paper first analyzes enterprises emission reduction pathways in practical production processes and then develops a framework to derive the magnitude of investment required in each pathway in order to achieve the designated target at the minimal cost under the framework it is found that in the absence of policy guidance individual enterprises emission reduction investments deviate from the optimal level to correct the distortion an alternative option is provided meanwhile to ensure achievement of the emission reduction target a stochastic model is introduced to measure the uncertainty arising from emission abatement investment the results show that an appropriate emission abatement ratio can reduce the systemic risk of emission abatement finally a simulation is given to demonstrate the results derived from the stochastic model

defence spending economic growth and temporal causality evidence from taiwan and mainland china 1952 1995 this paper uses a cointegration analysis and a vector autoregressive model var to examine the causal relationship between defence spending and economic growth for taiwan and mainland china over the period 1952 1995 it is found that these two variables are not cointegrated for both countries studied the results of the granger causality tests suggest bidirectional granger causality feedback between defence spending and economic growth for taiwan unidirectional granger causality running from economic growth to defence spending for mainland china and unidirectional granger causality running from taiwan s defence spending to mainland china s defence spending for cross country studied these results further indicate that there exists no arms race between two countries from both sides of taiwan strait furthermore impulse responses and variance decompositions are incorporated into the analysis the results from the impulse responses and variance decompositions tell a similar story

climate policy and the optimal extraction of high and low carbon fossil fuels we study how restricting co2 emissions affcts resource prices and depletion over time we use a hotelling style model with two nonrenewable fossil fuels that differ in their carbon content e g coal and natural gas and that are imperfect substitutes in final good production we study both an unexpected constraint and an anticipated constraint both shocks induce intertemporal substitution of resource use when emissions are unexpectedly restricted it is cost effective to use high carbon resources relatively more less intensively on impact if this resource is relatively scarce abundant if the emission constraint is anticipated it is cost effective to use relatively more less of the low carbon input before the constraint becomes binding in order to conserve relatively more less of the high carbon input for the period when climate policy is active in case the high carbon resource is relatively scarce abundant

external ambition and economic performance realist approaches to international politics raise the possibility that external policies based on expanding military power may undermine the economic bases of that power the links between external strategy and economic performance can be classified as fiscal macroeconomic effects structural microeconomic and structural effects and protectionist effects on foreign economic policy the case of prewar japan suggests that for countries at an intermediate position in the international power hierarchy and in the international division of labor the positive effects of external ambition on economic performance may dominate other cases national socialist germany contemporary developing countries and the postwar superpowers seem to confirm that international position is a principal determinant of these effects

military spending and economic growth in china a regime switching analysis this article investigates the impact of military spending changes on economic growth in china over the period 1953 to 2010 using two state markov switching specifications the results suggest that the relationship between military spending changes and economic growth is state dependent specifically the results show that military spending changes affect the economic growth negatively during a slower growth higher variance state while positively within a faster growth lower variance one it is also demonstrated that military spending changes contain information about the growth transition probabilities as a policy tool the results indicate that increases in military spending can be detrimental to growth during slower growth higher growth volatility periods

government size and economic growth a new framework and some evidence from cross section and time series data a study of the impact of government size on economic performance and growth is important theoretically one point of view suggests that a larger government size is likely to be detrimental to efficiency and economic growth because for example i government operations are often conducted inefficiently ii the regulatory process imposes excessive burdens and costs on the economic system and iii many of government s fiscal and monetary policies tend to distort economic incentives and lower the productivity of the system at the other extreme one can identify some points of view that assign to the government a critical role in the process of economic development and could argue that a larger government size is likely to be a more powerful engine of economic development there are several arguments on which the latter point of view is based these include besides others i role of the government in harmonizing conflicts between private and social interests ii prevention of exploitation of the country by foreigners and iii securing an increase in productive investment and providing a socially optimal direction for growth and development

military spending and the growth maximizing allocation of public capital a cross country empirical analysis i introduction public spending promotes economic growth by enhancing the productive capacity of private firms the literature recognizes the possibility that different types of public spending e g infrastructure education health and military expenses can exert different impacts on economic growth military spending is a case in point given its value in maintaining both internal and external security military spending increases the incentives to accumulate private capital and attract foreign investment the defense sector also provides a variety of public infrastructure e g roads and communication networks while also enhancing human capital accumulation through training and provision of educational services on the other hand military spending diverts resources that could be more productive for the economy in nonmilitary uses in this sense defense spending may degrade long run economic growth 1 the characterization of the external effect of public spending on private firm decisions has focused on the context of a production function with the specification of the aggregate flow of public spending barro 1990 or the aggregate stock of public capital turnovsky 1997 a line of research takes care to break out different forms of public spending devarajan swaroop and zou 1996 recognize productive and unproductive public spending play distinct roles in an endogenous growth model using a production function kalaitzidakis and kalyvitis 2004 break down public spending into infrastructure and maintenance expenditure while chen 2006 into productive and consumptive spending benoit s 1973 1978 seminal work decomposes growth rates to investigate defense expenditure rates on economic growth for a panel of 44 less developed nations between 1950 and 1965 with a view toward assessing the impact of different forms of public capital on economic growth the production function approach has been undertaken to investigate the impact of government spending by type on growth e g baffes and shah 1998 cross country panel evans and karras 1994 for a panel of states in the united states devarajan swaroop and zou 1996 investigate the impact of public capital types by focusing on growth rates and assume linear relations between the different types of government spending and the growth rate of real per capita gross domestic product gdp 2 however a theoretical growth model developed recently by shieh lai and chang 2002 suggests that the effect of the budget share of military spending on gdp growth is nonlinear following an inverse u shaped pattern building upon theoretical construction in shieh lai and chang 2002 this study derives the growth maximizing values of the shares of public investment allocated to the two different types of public capital i e military and nonmilitary spending as well as the growth maximizing tax rate focusing on a panel of both developed and developing economies an empirical investigation is undertaken to assess the theoretical implications of the model that both the effect of the budget share of military spending and that of the tax rate on long run growth are nonlinear following an inverse u shaped pattern the rest of the paper is organized as follows section ii sets up a representative firm model and derives the growth maximizing levels of the tax rate and the shares of public capital investment section iii sets up the econometric procedures followed and presents an empirical investigation of the theoretical model in a sample of developed and developing economies finally section iv concludes the paper ii theoretical framework we consider a closed economy populated by identical agents consuming and producing a single commodity y without population growth the labor force is equal to the population with labor supplied inelastically on the production side the representative firm j produces its output using a conventional cobb douglas technology i

defense expenditures economic growth and the peace dividend recent developments in eastern europe have created expectations of a peace dividend associated with reduced levels of u s defense expenditures we present and empirically estimate a two equation model for assessing the direct and indirect immediate and delayed effects of changes in defense spending on economic growth in the united states

non linear growth effects of financial development does financial integration matter using both macro and industry level data this paper analyses the non linear effects of financial development and international financial integration on economic growth in europe special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies absorption capacity results reveal evidence of significant non linear effects with less developed european countries gaining more from financial development in contrast benefits of international financial integration become significant at higher levels of financial development the data show that monetary integration in europe significantly contributed to a higher degree of financial integration entry of new eu members to the european monetary union may thus be the mechanism ensuring a virtuous development circle as the adoption of the euro may allow the development of domestic financial markets and financial integration to go hand in hand

effects of government spending on private investment this paper investigates the effects of military and non military public expenditures on gross private investment using cointegration and error correction analysis the latter type of public spending is disagreggated into expenditures of infrastructure consumption and other general government expenditures the empirical evidence from four emerging european countries namely greece ireland portugal and spain suggests that in some cases public capital spending stimulates investment while in others it depresses it also the results tentatively indicate that defence spending exerts no influence on private investment thus adding to the ongoing controversy of the economic effects of military spending

optimal early action on greenhouse gas emissions in this paper i argue that early action policies that focus on early actual emission reductions will tend to distort abatement investment decisions and thereby inflate the national compliance cost of a greenhouse gas emissions reduction target compliance cost savings stem from well planned early action that may or may not yield early actual emission reduc tions thus policies that target actual emission reductions such as credit for early action or an aggressive early cap and trade program have the potential to be highly distorting sim ulation results from a model calibrated to the canadian economy suggest that the associated welfare losses could be many billions of dollars action optimale dans les debuts quand il s agit de 1 effet de serre ce memoire suggere que des politiques qui tres tot s attaquent a la reduction des emissions de gas creant l effet de serre vont tendre a distorsionner les decisions d investissement pour les reduire et ce faisant accroitre le couit qu il y aura pour le pays a se conformer a des objectifs cibles de reduction des emissions de gas creant l effet de serre la reduction des couits qu il y a a se conformer vient d actions bien planifiees qui peuvent engendrer des reductions des emissions dans les debuts ou non ainsi des politiques qui visent des le depart des reductions au plus vite comme les programmes de credit pour action rapide ou cap and trade peuvent creer de fortes distorsions les resultats d un modele de simulation calibre pour s arrimer a l economie canadienne suggerent que les pertes de bien etre associees a ces distorsions pourraient s elever a des milliards de dollars

external military threat and the response of the member states of the gulf co operation council gcc the study shows that procurements of traditional arms by two countries have the possibility of moving together over time this is demonstrated with reference to iran and the member states of the gulf co operation council gcc for the period 1961 1996 acquiring arms by the member states of the gcc is shown to be only a response to the perception of their leaders to the external threat posed by iran throughout the varying regimes that have ruled teheran in the light of the recent emergence of macroeconomic problems such as unemployment in the economies of the gcc coupled with the ineffectiveness of the financially exhausting build up of arms as a military deterrent policy one important implication of the study is that the priority of the gcc leaders will have to turn to a more effective deterrent policy such as acquiring nuclear technology rather than engaging in a costly and unsuccessful arab military alliance as experienced in the 1970s

another look at growth and defense in less developed countries lim challenges evidence showing that defense spending encouraged the economic growth of 44 less developed countries ldcs over the 1950 65 periods by reexamining the relationship between defense and growth for 54 ldcs over the 1965 73 period regional analyses cover 21 african 13 western hemisphere 11 asian and 9 middle eastern and southern european ldcs the results show that defense spending was detrimental to economic growth although adverse effects that were marked in africa and the western hemisphere were absent in asia the middle east and southern eurpoe 4 references 2 tables

a european defence union a european defence union jacques fontanel and ron smith the end of the cold war the unification of germany and the removal of us troops has rekindled interest in european defence cooperation the ec has common security policies on its agenda the military role of the weu is being enhanced and the new nato strategy emphasizes multilateral european forces a european defence union offers large potential efficiency gains power like any natural monopoly is generated more effectively and more cheaply by joint forces than by the sum of fragmented individual forces there are also large economies of scale in weapons production trends in budgets costs and threats are making national provision problematic and national arms industries non viable an edu may appear more attractive than either spending vast sums to attain minimum efficient scale or relying on forces that are so small and ill equipped as to require either dependence on the us or acceptance of effective neutrality however an edu reduces national sovereignty poses problems of command control and organization risks free riding and adverse reactions by the us and ussr and is vulnerable to exploitation and rent seeking by military industrial interests this paper examines the economics of these issues and suggests a route towards effective cooperation

strategic environmental disclosure evidence from the doe s voluntary greenhouse gas registry abstract although mandatory disclosure programs have been studied extensively strategic voluntary environmental disclosures by firms are not well understood we study the motivations for and impacts of firms strategic disclosure of greenhouse gas reductions to the us government we first model firms joint abatement and disclosure decisions incorporating both economic and political incentives we then use data from the department of energy s voluntary greenhouse gas registry to compare reported reductions to actual emissions we find that participants in the program engage in highly selective reporting in the aggregate they increase emissions over time but report reductions in contrast non participants decrease emissions over time participants tend to be large firms facing strong regulatory pressure pressure from environmental groups reduces the likelihood of participation suggesting such groups viewed the program as a form of greenwash participating in the 1605 b program had no significant effect on a firm s changes in carbon intensity over time

defense spending and economic growth an alternative approach to the causality issue abstract this paper re examines the defense growth causality issue using a 21 country sample and granger causality methods developed by hsiao we find a feedback relationship existx for most countries this implies that neither growth nor defense can be considered exogenous a result suspected by joerding in earlier work but masked by his choice of an arbitrary lag structure

military expenditure spin off and economic development abstract this paper analyses the strategic causes and the economic spin off effects of military expenditure in less developed countries a formal optimising model is used to show that defence burden in ldcs may be analysed principally in terms of strategic factors such as security and threat and is determined relatively autonomous of economic factors given this autonomousness we scrutinise the widely held belief that defence expenditure has a substantial spin off in the form of technological progress r d skill creation effective demand all of which has positive developmental effects econometric evidence for india shows that such claims are exaggerated and economic spin off from defence to development is weak

competition for talent country and organizational level effects in the internationalization of european higher education institutions this paper analyzes the competition for skilled human resources between european higher education institutions hei through a multi level model predicting their ability to attract foreign researchers predictions of the model are tested on a dataset on internationalization of 601 heis in 8 european countries we show that 1 the model is able to explain a large proportion of the variance in the levels of internationalization of academic staff between heis 2 country factors are more important than heis characteristics in driving internationalization 3 research oriented heis in attractive countries have a larger share of international staff whereas this happens only to a limited extent with similar heis in low attractive countries 4 the association of research orientation with internationalization is mediated by the hei s international network these results have relevant implications for hei s hiring strategies as well as for national policies concerning careers and the mobility of researchers we suggest that policies should be tailored to structural conditions of heis and countries whereas imitating the approaches of highly attractive places might be damaging less attractive countries should rather focus on training and career opportunities for young national researchers as well as on instruments to keep linkages with national expatriates

economic growth and defense spending granger causality abstract this paper uses granger causality to check the assumed exogeneity of military spending relative to economic growth in previous studies of the relationship between economic growth and military spending the test results performed using two measures of military spending consistently show that military spending is not a strongly exogenous variable implying that previous work in this area is flawed

inference on productivity differentials in multi sector models of economic growth non zero marginal factor productivity differentials between sectors are a key feature of multi sector models of economic growth suggesting the potential for welfare gains through reallocation of resources between sectors however in existing studies inference on the parameter reflecting productivity differentials is inadequate reparameterization of hypotheses relating to the productivity differential parameter allows under the usual assumptions exact finite sample inference to be applied confidence intervals based on this approach applied to existing published studies suggest that many of the inferences on the potential gains in growth from exploiting inter sectoral productivity differences are fragile

defence spending and growth in greece 1974 90 some preliminary econometric results during the period 1974 90 greece has allocated an average of 6 4 of gdp to defence yearly the greek defence burden is currently the highest among european union and nato members at the same time the greek economy has exhibited the lowest rates of growth and it is plagued by persistent economic problems this paper using disaggregated military spending data investigates its economic effects during the period 1974 90 preliminary results reported here are inconclusive

financial determinants of domestic investment in sub saharan africa evidence from panel data abstract this study investigates the effects of financial development on domestic investment in a sample of 30 sub saharan african countries it is based on a dynamic serial correlation investment model including various indicators of financial development controlling for country specific fixed effects and nonfinancial factors of investment the results indicate a positive relationship between domestic investment total investment and private investment and various indicators of financial development higher financial development leads to higher future levels of investment implying a potent long run effect of financial development on domestic investment the findings imply that financial development can stimulate economic growth through capital accumulation

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics

absolute abundance and relative scarcity environmental policy with implementation lags we study the effectiveness of environmental policy in a model with nonrenewable resources and an unavoidable implementation lag we find that a time lag between the announcement and the implementation of an emissions quota induces an increase in emissions in the period between the policy s announcement and implementation since a binding constraint on emissions restricts energy use during the implementation phase more of the resources must be extracted outside of it we call this the abundance effect in the case of multiple resources that differ in their pollution intensity a second channel emerges since cleaner sources are relatively more valuable when the policy is implemented it is optimal to conserve them before the cap is enforced this ordering effect tends to induce a switch to dirtier resources before the policy is implemented compounding the increase in emissions via the abundance channel using the announcement lag in title iv of the 1990 caaa as a case study we are able to empirically show that the abundance effect and ordering effect are both statistically and economically significant we discuss a number of alternative policy options to deal with these undesirable side effects of policy announcements