## The Impact of Worldwide Military Spending Cutson Developing Countries

_IMF Working Papers, November 1, 1993_

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## Bibliographic details
- Authors: Steven A. Symansky, Tamim Bayoumi, Daniel P. Hewitt
- Published: November 1, 1993
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451850802.001

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### Overview
- Authors: Steven A. Symansky, Tamim Bayoumi, Daniel P. Hewitt
- Publication date: November 1, 1993
- Format: IMF Working Paper No. 1993/086, Issue: 086, Volume: 1993, Pages: 38
- DOI: https://doi.org/10.5089/9781451850802.001
- Stock No: WPIEA0861993
- ISBN: 9781451850802
- ISSN: 1018-5941
- Model used: specially modified version of the MULTIMOD world economic model
- Subject keywords: Defense spending, Expenditure, Exports, Foreign exchange, Imports, International trade, National accounts, Private consumption, Real exchange rates
- Selected region/keyword tags as in source: Africa; Eastern Europe; Western Hemisphere; developing country region; b. developing country region; arms export; arms import; Cutson developing countries; developing countries benefit; developing country economy; developing country framework; expenditure pattern; government spending; leads to a decrease; military expenditure; military spending; Private consumption; region of the world; WP

### Principal simulation result
- Scenario analyzed: coordinated reduction in military expenditures of 20 percent
- Core quantitative findings:
  - In developing countries the present value of consumption increases by 46 percent of 1992 GDP
  - Military expenditures cuts, in present value terms, equal 33 percent of 1992 GDP

### Channels and interpretation of gains
- Mechanisms identified by the simulations:
  - Release of domestic resources due to lower military spending
  - Positive international economic externality driven by enhanced trade
  - Lower world interest rates contributing to welfare gains
- Comparative outcomes:
  - Net debtor developing country gains exceed those of industrial countries

### Cross-country patterns
- Examination of individual developing country economies confirms:
  - The external trade effect is significant in determining both the pattern and the level of gains across developing countries

### Policy-relevant implications (as presented)
- Coordinated reductions in military spending can:
  - Increase consumption in developing countries substantially relative to the fiscal cost measured in present value terms
  - Generate international spillovers via trade and global interest rates that benefit debtor developing countries more than industrial countries

*Source: IMF Working Papers — "The Impact of Worldwide Military Spending Cutson Developing Countries", Steven A. Symansky, Tamim Bayoumi, Daniel P. Hewitt, November 1, 1993.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-impact-of-worldwide-military-spending-cutson-developing-countries-1141_