STUDY ON DEFENSE EXPENDITURE AND ITS FINANCING
STUDY ON DEFENSE EXPENDITURE AND ITS FINANCING

Summary/Abstract: In an era of geopolitical changes stability seems to be in danger. The concept of threat is sometimes artificial taking into account a wide range of challenges in terms of security, including either state and non-state threats or the problems resulting from the rapid dissemination of information and technological developments. In this paper, we will see how to work and put into military or defense of working expenses such as the usage in political and economic environment and we will try to capture aspects of their funding in the domestic, regional, European and international level. In this sense, we will seek to answer the question: Do defense expenditures influence macroeconomic sources and methods of financing? The present study consists in a documentary analysis of the literature regarding defense funding and spending both at a European and international level. The analysis will consist in different correlations between different factors like economic growth, corruption, debt and not finally, the defense industry with the defense expenditures. Following the analysis, we conclude that the level of national defense expenditure has a different dynamics by correlating with economic growth, public debt, the corruption level at country level and the development stage of the defense industry. This dynamics is complex when the analysis is conducted in peacetime, conflict / warfare, or external threats. Defense spending positively influences economic growth and public debt during conflicts / wars and external threats, while in peacetime it is necessary to correlate the level of military expenditure with macroeconomic indicators. Under conditions of existence and manifestation of corruption at country level there is an unjustified increase in the defense expenditures, which negatively influence the economic growth and the public debt. A strong argument in this case is the lack of macroeconomic transparency that practically limits budgetary control. The defense industry can positively influence defense spending in conflict / war situations or the existence of external threats when they create a positive impact on economic growth and debt.

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