The Impact of Worldwide Military Spending Cutson Developing Countries
November 1, 1993
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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.
Subject: Defense spending, Expenditure, Exports, Foreign exchange, Imports, International trade, National accounts, Private consumption, Real exchange rates
Keywords: Africa, arms export, arms import, b. developing country region, Cutson developing countries, Defense spending, developing countries benefit, developing country economy, developing country framework, developing country region, Eastern Europe, expenditure pattern, Exports, government spending, Imports, leads to a decrease, military expenditure, military spending, Private consumption, Real exchange rates, region of the world, Western Hemisphere, WP
Pages:
38
Volume:
1993
DOI:
Issue:
086
Series:
Working Paper No. 1993/086
Stock No:
WPIEA0861993
ISBN:
9781451850802
ISSN:
1018-5941
