A survey on the effect military expenditures on social welfare in developing and developed countries

Military expenditures is an important part of any country's national budget. From an economic point of view, government spending on national defense is determined by national fiscal policies. The increasing trend of military and defense expenditures in recent years in the world and in Iran shows an increasing importance of examining the economic impact of defense spending. Defense spending can influence important macroeconomic variables, according to existing theoretical literature. These include social welfare and its evaluating indices. In this paper, the effect of military spending on welfare Index and welfare expenditures (health and education expenditures) has been investigated by panel data approach using a sample of 47 countries divided in two groups of developing and developed ones. Results show that education expenditures are not affected by military spending in both developed and developing countries and the sample of all countries. But health expenditures has a significant negative relationship with military spending in both developing and developed countries. Although there is no significant relationship between social welfare and military spending in developing countries, the relation is negative and significant in developed countries (and in the sample of all countries). This suggests that governments should be more cautious in planning expansions in their military spending.