Military expenditure and the growth of the Turkish economy 1952-80

Abstract

Turkey with one of the fastest growing economies in the world but a per capita income only about one seventh of that for the industrialised world has allocated approximately 5 per cent of her gross domestic product to defence since 1952. There is evidence that the level and form of military expenditure has been determined not only by internal and external security factors but also by the ideological function of the military which is closely related to its integration into the sphere of production. There is no evidence of military expenditure having been used as a tool of economic policy to control inflation or unemployment. Turkish military expenditure also needs to be understood in relation to U.S. foreign policy, and in particular through the conditions attached to the flows of military and economic aid. Militarism has been instrumental in shaping the form of industria1isation in Turkey and helped maintain the free umregulated conditions under which foreign capital could operate. One of the consequences of the Turkish path to development has been to create a long term dependency on imports of capital goods and raw materials which ultimately constrained growth in the mid-1970s. Arms production in Turkey cannot be a vehicle for industrialisation since domestic linkages would be limited and one form of dependency would be replaced by another. The links between military expenditure and economic growth are theorised in terms of resource mobilisation and resource diversion which are then estimated by two-stage least squares in a series of equations in which the rate of growth is treated as a function of both exogenous and endogenous variables in a dynamic simultaneous system. The results indicate that the impact of military expenditure is transmitted to the economic structure through both direct and indirect channels and that over the period 1952-76 increases in the military burden have been associated with a lower rate of economic growth.