Does Military Expenditure Impede Sustainable Development? Empirical Evidence from NATO Countries

TL;DR

This paper investigates how military spending affects sustainable development in NATO countries, revealing negative impacts of military expenditure and energy consumption, positive effects of foreign investments, and significant cross-country differences.

Contribution

It provides empirical evidence on the varying effects of military expenditure on sustainable development across NATO countries using panel cointegration and AMG estimators.

Findings

Military expenditures negatively affect sustainable development.

Foreign direct investments positively influence sustainable development.

Impact varies significantly across different NATO countries.

Abstract

This study analyzes the impact of military expenditures on sustainable development in NATO countries. The analysis utilizes annual data for the period between 1995 and 2019. In this study, the Durbin-Hausman panel cointegration test is used to analyze the cointegration relationship between the variables and the Panel AMG estimator is used to estimate the long-run coefficients. The results of the AMG estimator show that military expenditures and industrial production index have a negative effect on sustainable development in NATO countries, while foreign direct investments have a positive effect. The impact of primary energy consumption is negative and less significant than the other negative impacts. The study also analyzes how the impact of military expenditures on sustainable development varies across countries. This analysis reveals the significant differences in the direction, significance, and coefficient size of the relationship among different countries. These findings suggest that the impact of military expenditures on sustainable development varies across countries. Therefore, countries should develop policies to ensure sustainable development by considering their specific dynamics.