Factors Affecting Military Expenditure in Asean

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue V, May 2022 | ISSN 2454–6186

Factors Affecting Military Expenditure in Asean

Iman Agung RAMADHAN, Agus Tri BASUKI
Universitas Muhammadiyah Yogyakarta Indonesia

Abstract: This study aims to determine whether economic growth, unemployment and investment affect military spending in five ASEAN countries consisting of Indonesia, Malaysia, Singapore, Thailand and the Philippines in 2009-2019. This study uses secondary data with a period of ten years. Data obtained from the World Bank Indicators. This study uses panel data regression method with the selected model Fixed Effect Model. Based on the results of the analysis that has been carried out, it is obtained that there are two variables that affect military costs, namely economic growth and unemployment. Unemployment is the variable that has the most influence on military costs in the 5 Asean Countries. Meanwhile, investment has no effect on military spending. The ASEAN region is in a safe condition, so that military spending in ASEAN countries is quite stable from year to year. Political and economic stability in the ASEAN Region proves that increased investment does not encourage a significant increase in military spending.

Keywords: Economic Growth, Unemployment, Investment, Military Expenditure, Fixed Effect Model.

JEL Clasification: E6, F43, H5

I. INTRODUCTION

Military costs are one important factor for a sovereignty state, which maintains sovereignty and security from internal and internal threats external. This factor greatly influences economic growth and rates unemployment, with defense costs incurred by the state during fighting to defend state sovereignty and stabilize security country is not small. The addition of the state budget to military costs in countries that are waging a war. Conflict situation or warfare in a state results in economic turmoil in the state, this is due to the minimal level of security, resulting in production manufacturing, economic activity, economic actors stalled, which results the rate of economic growth decreases and adds to the unemployment rate.
Military costs are imposed by each country which is taken from the budget which is separated by country from the national income of each country for provide security against internal and external threats. Expending defense consists of production (or imports from other countries) tools and vehicles used in defense, repair and maintenance costs for equipment and vehicles, costs for restructuring and development (R&D) and civilian staff working in the defense field. If the country feels threatened, the country reduces investment which will reduce the welfare of the country to increase expenditure defense, the effect of defense spending on economics is one of the topics being discussed at this time. Many countries prioritize defense spending compared to reduced education, health and infrastructure.

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