MILITARY EXPENDITURE, POLITICAL STABILITY AND ECONOMIC GROWTH IN THE WESTERN BALKAN COUNTRIES

The Western Balkan countries have invested considerable resources in order to achieve peace, establish political stability and sustain economic growth. This study aims to empirically assess the impact of military expenditure on economic growth in a panel of five Western Balkan countries from 2001 to 2022. The research uses a panel autoregressive distributed lag (ARDL-PMG) model to estimate the short-run and long-run relationships between the variables of interest. In addition, the fully modified least squares method is applied to ensure the reliability of the findings. A positive relationship was identified between military spending, and economic growth. The results strongly indicate that military expenditure is beneficial for economic growth. The empirical findings of the study provide support for the view that policymakers should increase investment in the military defense sector so as to contribute to economic growth.