An Economic Analysis on the Use of Resources Allocated for Defense: An Empirical Study on Turkey

Abstract

In this study, the relationship between Turkey's defense expenditures and the independent variables selected as gross domestic product, foreign debt, and unemployment, in a 33-year period between 1998 and 2020, were examined using the Toda-Yamamoto causality test. According to the findings, it has been observed that there is causality from defense expenditures to gross domestic product, that is, the change in defense expenditures affects gross domestic product. Similarly, causality has been determined from defense expenditures to external debt. Therefore, it is possible to state that the change in defense expenditures will have an impact on foreign debt. In this respect, the findings are in agreement with the literature. The increase in defense expenditures will increase the production of the defense industry, the export of this production will result in a resource inflow to the country and the gross domestic product will increase. On the other hand, in some countries, defense expenditures will be financed by debt from foreign sources, which will increase foreign debt.