The purpose of this publication is to study the dependence of defence funding on economic factors, namely the prosperity of the country, economic growth, the budget deficit, gross government debt, ...and inflation rate. The investigation uses secondary data obtained from the Eurostat database and covers the period from 1997 to 2021. The author analyses three Baltic countries such as Estonia, Latvia, and Lithuania, to ascertain which economic factors have a statistically significant effect on defence sector funding. For this purpose, the author applies correlation analysis and automatic linear modelling (ALM). The findings of the investigation showed differences and similarities between the countries under consideration. In the case of Estonia, defence funding is significantly affected by the prosperity of the country, which is expressed in real GDP per capita, and gross government debt. These economic factors explain 92.6 per cent of defence funding. The cases of Latvia and Lithuania are very similar in terms of the influence of economic factors on defence spending. In these countries, the tendencies of real GDP per capita significantly effect on defence funding. This influence is slightly different and amounts to 76.2 and 78.4 per cent, for Latvia and Lithuania, respectively. The insights of the research can be useful to the governments of these nations when making decisions about defence funding aimed at ensuring security in the Baltic region.
Debt and deficits are important for an economy, and deficit spending policy positively affects economic growth. However, if external debt increases too much, it may also lead to economic problems. In ...the literature that was given relatively little information to defence spending contributing substantially to government debt level in the studies focused on the determinants of debt. Turkey is a country allocating more funds to its defence spending and arms import in recent years. Therefore, to what extent its defence expenditures and arms import is effective in increased debt stock is a subject of debate. To conclude this issue, this study examines the relationship between defence spending, arms import, and external debts through ARDL bund test with annual data for the 1975- 2017 period. The findings show that there is a positive and statistically significant relationship between defence expenditures and arms import and foreign debt in the short and long term.
Background: The effectiveness of defence planning within Ukraine’s defence and security sector is heavily contingent upon the meticulous formulation and execution of future defence budgets, as ...delineated in Ukraine’s National Security Strategy. Furthermore, it is imperative to com- prehensively examine international experiences in defence planning, specifically in developing and sustaining vital resources and capabilities for fulfilling defence missions under budgetary constraints. Consequently, there exists an inherent necessity for extensive dialogues among scholars and officials tasked with military-strategic decision-making.
Results and Conclusions: This research explores the paramount significance of defence plan- ning for bolstering Ukraine’s security and defence capabilities. The intrinsic link between the identified issue and pivotal scientific and practical objectives becomes evident when considering the prioritisation of robust financial planning and judicious resource allocation, with the aim of fashioning modernised defence forces adept at countering emergent security threats. In this regard, the study diligently examines international experiences to discern and adapt best practices of essential facets like equipment, command systems, intelligence capabilities, and personnel training, all of which play a pivotal role in fortifying defence readiness and mission efficacy. Acknowledging the constraints of limited financial resources necessitates judicious strategic decision-making to optimise defence expenditures within well-defined parameters is paramount.
This paper discusses recent quantitative research on defence spending in interwar Lithuania, and provides a comparison between the burden of defence spending in Lithuania, Latvia, Estonia, Finland ...and Poland in 1924, 1938 and 1939, which are the only years with available data on the total expenditure in Lithuania. Although contemporary mainstream economic science does not consider the military sector as unproductive (it ‘produces’ security services), it still sees it as a burden to the economy, because defence spending decreases private consumption, along with private and public civil investment. Two indicators of this burden are discussed: the share of defence spending in total state spending, and the ratio of defence spending to gross national income (GNI) or gross domestic product (GDP). In recent research on defence spending in interwar Lithuania, only the size and changes in nominal expenditure have so far been measured, without taking into consideration changes in the purchasing power of the litas. The main findings of the application of the second indicator include the fact that among the Baltic countries (including Finland), the Latvian economy was most heavily burdened by defence spending in 1924–1925. On the eve of the Second World War, however, Lithuania became the leader.
The latest shift in the global balance of power (i.e., Russia invading Ukraine) has reinforced the role of NATO and breathed new life into the discussion on defence expenditure, particularly in ...respect to NATO’s two percent GDP guideline. This paper is interested in the defence expenditure of one of the smallest NATO nations, Luxembourg. The author investigates Luxembourg’s post-Cold War military spending via two different methods (graphical analysis and econometric modelling) and in relation to a selection of endogenous and exogenous influence factors. Graphical analysis allows for an explanation of the dichotomy of Luxembourg being, on the one hand, NATO’s smallest contributor in terms of defence expenditure as a share of GDP, and on the other hand NATO’s top spender in terms of military equipment by share of defence expenditure. In turn, the econometric analysis in this paper proposes an OLS model which explains Luxembourg’s defence expenditure as a share of GDP in relation to two endogenous variables (GDP per capita and military personnel) and one exogenous variable (US defence expenditure as a share of GDP). This model has two merits. First, it offers a science-based indication as to how many staff the Luxembourg Armed Forces need to recruit in the future. Second, it exposes the limits of defence expenditure as a share of GDP for evaluating the military effort of a nation. Finally, the limitations of the paper are that the developed model is only applicable to Luxembourg. The author tested it against an updated version of Verlaine’s (2022, in press-a, in press-b) small NATO nations, but it failed to produce convincing results.
This scientific article aims to assess the link between defence expenditures and sustainable development in Romania. As the world faces increasingly complex security challenges and environmental ...concerns, it becomes crucial to examine the interplay between defence investments and sustainable development goals. The study focuses specifically on Romania, a country that has been undergoing significant economic and political transformations since joining the European Union. The analysis employs a comprehensive framework that integrates economic, social, and environmental indicators to evaluate the sustainability implications of defence expenditures. Using data from various sources, including national statistics and international databases, this study examines the trends in defence spending in Romania over a specified period. The research investigates the potential trade-offs between defence investments and sustainable development outcomes by considering key dimensions such as economic growth, social well-being, and environmental impact. By examining the case of Romania, valuable insights can be gained regarding the challenges and opportunities in balancing defence expenditures with sustainable development priorities. The study not only provides a comprehensive analysis of the current situation but also identifies potential pathways for enhancing the sustainability of Romania’s defence sector. This study contributes to the broader discourse on sustainable security fostering a more resilient and sustainable future.
As geopolitical instability increases and new threats emerge, a number of countries are increasing their respective allocations for defence expenditure in order to take greater responsibility for ...their citizens in terms of defending and protecting their values and way of life. Small states such as Lithuania, Latvia, and Estonia must evaluate certain economic, political, and strategic factors when increasing their respective defence expenditure. While they do tend to increase expenditure on national defence matters, budgetary constraints often force them to cut funding in some civilian domains or to increase their borrowing on international markets. Therefore, the security and defence of small states must be addressed in an integrated way, taking into account economic, social, and environmental factors. The aim of this article is to assess the relationships between defence expenditure and sustainable development indicators during the period between 2000 and 2018 in the Baltic states. The authors of this article aimed to determine which sustainable development indicators have a significant impact upon a country’s expenditure when it comes to defence matters. The study was conducted using econometric methods, including Spearman’s correlation analysis and Automatic Linear Modelling (ALM). The research results revealed some differences amongst the Baltic countries. In Lithuania, the employment rate and R&D personnel as a share of the active population demonstrated a significant impact upon defence expenditure. In Latvia, defence expenditure was found to be affected by disposable household income per capita and environmental taxes as a share of total tax revenue. In Estonia, defence expenditure was mainly influenced by disposable household income per capita and energy import dependency. The study’s findings may be used to ensure both the security of the country and the implementation of the Sustainable Development Goals.
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