Corruption, Military Spending and Growth

This paper considers the complementary effect of corruption and military spending on economic growth, analyzing both the direct impact of public spending and effect of allocating resources between categories of public spending within the framework of an endogenous growth model. The non-linearities that emerge from are the result of the links between the components of public spending, corruption and economic growth. The main findings of the empirical analysis confirm the expectation that corruption and military burden lower the growth rate of GDP per capita. They also suggest that when the the complementarity effect between military spending and corruption is omitted, as in most studies, the impact of military burden on economic performance is underestimated.