Impact of defense spending on unemployment in five countries from Asia

Abstract

The objective of this study is to examine empirically the impact of defense spending on unemployment along with a number of control variables for a set of five selected countries from Asia which include Cambodia, China, Malaysia, Pakistan, and the Philippines. For empirical investigation annual data over the period of 1992 to 2013 are used. While, prior to regression analysis, the data were sensibly checked using sundry of relevant tests. The empirical results reveal that defense spending is not a better option to overcome unemployment problem in most of the sample countries. Thus, the findings suggest that lower defense budget allocation will provide more resources for other sectors which are relatively more productive and can help to improve economic and social welfare of these selected countries from Asia. Besides decreased military expenditures, encouraging domestic investment and discouraging population growth can help reduce unemployment. Remittance appears to have a positive relation with unemployment, the implications of which need to be addressed by policymakers.