Military Spending and Economic Growth Nexus in Sixteen Latin and South American Countries: A Bootstrap Panel Causality Test

This study revisits the causal linkages between military spending and economic growth in sixteen Latin and South American countries (i.e., Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Paraguay, Peru, Uruguay, and Venezuela) by focusing countryspecific analysis for the period 1988-2010. The panel causality analysis that accounts for dependency and heterogeneity across countries supports evidence on the direction of causality is consistent with the neutrality hypothesis for twelve countries and a military spending-growth hypothesis for Belize and Nicaragua. Regarding the direction of growth-military spending nexus, we find one-way Granger causality running from economic growth to military spending for Bolivia and Ecuador.