Does Defence Expenditure Mobilise Resources in LDCs?

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Does Defence Expenditure Mobilise Resources in LDCs?

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Military expenditure in developing countries is large and rising; its economic effects are a matter of vital concern. This article analyses the impact of military spending on the mobilisation of physical resources in less developed economies; resource creation is proxied by the saving-income ratio. Both theoretical and empirical arguments are provided to show that, though there are some beneficial spin-offs from defence, the overall impact is to lower the rate of resource creation significantly. This may have sizable negative effect on growth and development.

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