Comparative Study

By Jiapeng Xie. 2020

The article examines the impact of military expenditure on economic growth in the three South Caucasus states — Armenia, Georgia, and Azerbaijan — over the period 2000–2024, with the aim of assessing not only the statistical significance of defence spending on GDP, but also the direction of the underlying causal relationships. To this end, a series of statistical analyses were conducted, employing in particular the Pearson correlation coefficient, the ADF unit root stationarity test, and the ARDL bounds cointegration model with optimal lag structure selection based on the AIC criterion. The database was compiled from official sources, including the World Bank, the Stockholm International Peace Research Institute, and the International Monetary Fund, while all calculations were performed using EViews 14 SV. The statistical reliability of the models was assessed using the Jarque-Bera, Breusch-Godfrey, and Breusch-Pagan-Godfrey diagnostic tests. The results indicate that in Armenia, military expenditure exerts a negative and statistically significant effect on growth; in Georgia, a short-run positive effect coexists with a long-run negative one; while in Azerbaijan, the effect is statistically insignificant. The study concludes that the economic effectiveness of military spending is highly contingent on a country's resource base and economic structure.

Subfields: Evaluation & Benchmarks

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