The Impact of Worldwide Military Spending Cutson Developing Countries

Author/Editor:

Steven A. Symansky ; Tamim Bayoumi ; Daniel P. Hewitt

Publication Date:

November 1, 1993

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper investigates the economic impact of a coordinated reduction in military expenditures of 20 percent using a specially modified version of the MULTIMOD world economic model. Simulation results indicate that in developing countries the present value of consumption increases by 46 percent of 1992 GDP, compared to military expenditures cuts, in present value terms, of 33 percent of 1992 GDP. The gains reflect both the release of domestic resources and a positive international economic externality due to enhanced trade and lower world interest rates. Accordingly, the net debtor developing country gains exceed those of industrial countries. Examination of individual developing country economies confirms the significance of the external trade effect on the pattern and level of gains.

Series:

Working Paper No. 93/86

English

Publication Date:

November 1, 1993

ISBN/ISSN:

9781451850802/1018-5941

Stock No:

WPIEA0861993

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

38

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