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Arms Race, Military Expenditure and Economic Growth in India

Hou, Na (2010)
Ph.D. thesis, University of Birmingham.

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This thesis aims to study the causes and effects of military expenditure on economic growth in India. Three aspects of this subject are concentrated which link well with the core stylised facts of the Indian defence effort and its developmental problems: the 'security dilemma' in terms of its relationship with its neighbour, Pakistan; the core factors that motivate the demand for defence; the economic impact of militarization and the effect of defence on development. First, the arms race between India and Pakistan is analyzed by using a Richardson action-reaction model and cointegration techniques. The empirical results provide robust evidence to support the existence of an enduring arms race between India and Pakistan, even after taking into account a structural break. Second, the results indicate that India's military expenditure is mainly determined by income, political status, the perceived threat from Pakistan and the external wars both in the long-run and in the short-run. Third, the relationship between military expenditure and economic growth is studied in India and in a broader context, i.e. in a cross-sectional and panel data study of 36 developing countries. The significant and negative effect of defence on economic growth is confirmed in both cases.

Type of Work:Ph.D. thesis.
Supervisor(s):Sen, Somnath and Barrett, C.R.
School/Faculty:Colleges (2008 onwards) > College of Social Sciences
Department:Department of Economics
Subjects:HB Economic Theory
Institution:University of Birmingham
ID Code:652
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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