IMF Working Papers

The Impact of Worldwide Military Spending Cutson Developing Countries

By Steven A. Symansky, Tamim Bayoumi, Daniel P. Hewitt

November 1, 1993

Preview Citation

Format: Chicago

Steven A. Symansky, Tamim Bayoumi, and Daniel P. Hewitt The Impact of Worldwide Military Spending Cutson Developing Countries, (USA: International Monetary Fund, 1993) accessed September 24, 2024
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.

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

Publication Details

  • Pages:

    38

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1993/086

  • Stock No:

    WPIEA0861993

  • ISBN:

    9781451850802

  • ISSN:

    1018-5941

You May Also Be Interested In...

Navigating External Shocks in Southeast Asia's Emerging Markets: Key Lessons and Challenges in Applying the IMF’s Integrated Policy Framework

September 23, 2024

Seychelles: Technical Assistance Report-Developing a Framework for Climate Budget Tagging

September 23, 2024

Togo: Selected Issues

September 23, 2024

Satellite-Based Census of Residential Buildings: Application for Climate Risk Assessment

September 20, 2024