ABSTRACT
This chapter examines whether military spending and arms imports helped or hindered growth in the 1980s, military spending/arms imports were associated with changes in external debt, and military expenditures impacted uniformly between groups of countries. It argues that developing countries (DC) will exhibit large variations in how defense spending has impacted economic performance. Depending on the relative impact of defense spending, the concomitant resource reallocation may significantly affect the economic performance of these countries. Dividing DCs according to producers and non-producers of at least one major weapon system indicated that producers experienced positive economic impacts from military expenditures while non-producers experienced declines in growth and investment. Military expenditures and arms imports are added to the regression equation to assess their impact on overall economic growth. Military expenditures finance heavy industry, the acquisition of advanced technologies, provides employment, and the like.
