Dynamic Linkages Between Military Expenditures, Economic Growth, Gross Fixed Capital: Panel Data Analysis for NATO Countries

The aim of this study is to investigate empirically the relationship between economic growth, military expenditures and gross fixed capital formation of 27 NATO countries using annual data from 1995 to 2017 period. In the study where two models were used, economic growth and defense expenditures were chosen as dependent variables, respectively. In the empirical findings, the cointegration relationship was determined in both models. According to causality analysis, two-way causality was determined between military expenditures and economic growth, between gross fixed capital formation and economic growth, and between military expenditures and gross fixed capital formation. According to the findings, it was observed that policy makers would produce policies to increase defense expenditures and this would have a positive impact on economic growth