The Effect of Defence Spending on Economic Development in Central Europe
The Effect of Defence Spending on Economic Development in Central Europe

Summary/Abstract: The relationship between economic development and defence has always been the subject of significant literature in the economic environment. The present study examines the impact of defence spending on economic growth from a global perspective for 2009-2016. It takes into consideration the economic size and status of each country in the current geopolitical context. The SMD model and linear regression are used to investigate the economic development-defence connection by using the SIPRI data set for 12 Central European countries. Numerous regression analysis examine the data using different estimated econometric formulas with maximum probability. The empirical results show that in the long run, the linear relationship between defence spending and economic development is sustained only in some cases with positive effects on GDP. The results are unfavourable in most of the analysed countries, defence spending having significant negative effects on economic development.

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