The Opportunity Costs of Military Expenditure

Abstract

The defense or military expenditure is a vital necessity to any nation insofar as the roles of internal peace and immunity against foreign aggression in ensuring progress of a nation in all relevant fronts are concerned. In this chapter, it has been observed that the relationship between military expenditure and the growth rate GDP is nonlinear in the sense that at first with increase in the military expenditure the growth rate rises and after reaching the peak it declines with the further increase. There are also significant opportunity costs of military expenditure both in terms of GDP and economic development as a step-up in the military expenditure leads to the decline in the other forms productive expenditures like that in health, education, infrastructure inter-alia. This implies the necessity of military expenditure needs to be lowered which can be made possible by improving international harmony and imparting more bonhomie among the nations particularly amongst those which are close neighbors.