REVISITING THE NEXUS BETWEEN MILITARY SPENDING AND GROWTH IN THE EUROPEAN UNION

This paper focuses on the influence of military spending on European economic growth. The estimated regressions are based on Barro's (1991) growth model, which controls for economic institutional variation across countries. The cross-section and panel data analyses cover the period 1960-2000. The empirical findings indicate that military spending has an overall net negative influence on economic growth. Furthermore, the magnitude of this negative impact tends to increase over time, as cross-section regression results indicate. Given the development of a Common European Security and Defence Policy (CESDP), these findings suggest that enhanced defence spending may hinder European economic growth.