Benoit Revisted: Defense Spending and Economic Growth in LDCS

Abstract

In the early 1970s, Emile Benoit shocked development economists by presenting positive cross-country correlations between military expenditures and economic growth rates in less developed countries. Skeptics have abounded, and Benoit's research has been much worked over, both conceptually and statistically. this paper reviews this debate. We conclude that Benoit's findings were aberrant: Most studies suggest that military spending does have an adverse impact on economic growth in developing countries, largely through its adverse effect on saving and investment.