The Impact of Worldwide Military Spending Cuts on Developing Countries

38 Pages Posted: 15 Feb 2006

See all articles by Tamim Bayoumi

Tamim Bayoumi

International Monetary Fund (IMF); Centre for Economic Policy Research (CEPR)

Daniel Hewitt

affiliation not provided to SSRN

Steven Symansky

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: November 1993

Abstract

This paper investigates the economic impact of a coordinated reduction in military expenditures of 20 percent using a specially modified version of the MULTIMOD world economic model. Simulation results indicate that in developing countries the present value of consumption increases by 46 percent of 1992 GDP, compared to military expenditures cuts, in present value terms, of 33 percent of 1992 GDP. The gains reflect both the release of domestic resources and a positive international economic externality due to enhanced trade and lower world interest rates. Accordingly, the net debtor developing country gains exceed those of industrial countries. Examination of individual developing country economies confirms the significance of the external trade effect on the pattern and level of gains.

JEL Classification: E62, F17, H56

Suggested Citation

Bayoumi, Tamim and Hewitt, Daniel and Symansky, Steven, The Impact of Worldwide Military Spending Cuts on Developing Countries (November 1993). IMF Working Paper No. 93/86, Available at SSRN: https://ssrn.com/abstract=883816

Tamim Bayoumi (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6333 (Phone)
202-623-4795 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Daniel Hewitt

affiliation not provided to SSRN

No Address Available

Steven Symansky

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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