Impact of military expenditures on economic development : interim synthesis report

to identify recipient countries with excessive military budgets, as determined by regional and global norms. The regulation is intended to restrain arms races and the proliferation of sophisticated weapons, and to ensure that resources intended for economic development are not diverted to military purposes. Part I of this report points out the deficiencies in both the data and the methods used to analyze military expenditures in developing countries. The report then surveys virtually the entirety of the literature on security and development. Empirical evidence is presented on: (1) the determinants of military expenditures in developing countries, including analysis of the budgetary decisionmaking process and the importance of such factors as external threats, internal bureaucratic processes, and access to resources; (2) the impacts, both positive and negative, of military expenditures on economic growth; and (3) different conditions likely to influence the causes and consequences of military sector expenditures among country sub-groups. The report concludes that military spending, despite some positive spin-off effects, constrains development by reducing capital formation as resources are diverted from saving and investment. Policy implications for A.I.D. in the areas of policy development, program planning, and data collection are presented. How A.I.D. might influence the causes and consequences of military buildups will be investigated in a later study. Includes 16-page bibliography.