How arms trade and military expenditures affect economic growth

Abstract: Military expenditures are a costly investment especially if a government already has a strained budget to maintain. The aim of this report is to explore whether it is economically viable to motivate such investments and if such investments have other benefits than just the sake of having arms. This was done with the help of data from the World Bank and was analysed with respect to two different economic growth models in order to see if such a correlation could be found. The findings were to some degree inconclusive, as one model hinted that such a correlation could be found in the long run while the other model was more indecisive. Prior studies on this topic are somewhat diverse, but most studies conclude that military expenditures are negatively correlated with economic growth. The results of such effects would give military expenditures economic incentives but could also be used to motivate investments in further education, research, and government spending.