The Nexus between Military Expenditures and Economic Growth in the BRICS and the US: A Bootstrap Panel Causality Test

This study re-examines the causal linkages between military expenditures and economic growth for the BRICS countries (Brazil, Russia, India, China, and South Africa) and that for the USA for the period 1988-2012. Panel causality was examined to explain dependency and heterogeneity across countries. The results of Granger causality tests show that military expenditures influence economic growth in the United States, economic growth influence military expenditures in both Brazil and India, a feedback between military expenditures and economic growth in Russia, and no causal link exists between military expenditures and economic growth in China and South Africa. These results indicate that the causality between military expenditures and economic growth varies across countries with different conditions. The findings of this study could provide important policy implications for the BRICS countries and also for the United States.