Accessible Requires Authentication Published by De Gruyter September 15, 2018

Military Expenditure and External Debt in South Asia: A Panel Data Analysis

Shujaat Abbas ORCID logo and Shahida Wizarat

Abstract

This study investigates the effect of military expenditure on the exploding external debt in five major South Asian economies, i.e. Pakistan, Bangladesh, India, Nepal and Sri Lanka from 1990 to 2015 using panel fixed effect regression model. The estimated result reveals that the external debt of selected South Asian countries is positively determined by their military expenditure, and negatively explained by their domestic investment activities. The study urges the efficient utilization of available capital resources into more productive investment activities to create employment for the labor force. The future prosperity of the region lies in the peaceful resolution of all outstanding disputes and a corresponding reduction in military spending that can make the region safe for domestic and international investments.

JEL Classification: C23; F21; F34; O10

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Published Online: 2018-09-15

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