This book examines the impact defense spending has on economic growth. While defense spending was not deliberately invented as a fiscal policy instrument, its importance in the composition of overall government spending and thus in determining employment is now easily recognized. In light of the collapse of the Soviet Union and the consequent reduction in the threat to the security of the United States, maintaining defense spending at the old level seems indefensible. The media has concentrated on the so-called peace dividend. However, as soon as the federal government is faced with defense cuts, it realizes the macroeconomic ramifications of such a step. Based on studies included in this volume, we examine the effects of defense spending on economic growth and investigate how the changed world political climate is likely to alter the importance and pattern of defense spending both for developed and developing countries.

List of Tables and Figures -- Preface -- PART ONE Introduction -- 1 Defense Spending and Economic Growth: An Evaluation of the Overall Impact / James E. Payne and Anandi P. Sahu -- PART TWO Theoretical Underpinnings -- 2 Conceptual Linkages Between Defense Spending and Economic Growth and Development: A Selective Review / Rati Ram -- 3 A Theory of Defense Spending and Economic Growth / Michael J. Mueller and H. Sonmez Atesoglu -- 4 Arms Race Modelling and Economic Growth / Charles H. Anderton -- PART THREE Effects on Industrialized Economies -- 5 Defense Spending and Economic Growth: Spillovers vs. Crowding Out / Laurence H. Meyer and Fredric Q. Raines -- 6 Military Expenditure and Employment / J. Paul Dunne -- 7 Defense Versus Nondefense Spending: A Macroeconomic Comparison / James E. Payne, Kevin L. Ross and Edward A. Olszewski -- 8 Some Economic Effects of Unilateral and Multilateral Reductions in Military Expenditures in the Major Industrialized and Developing Countries / Jon D. Haveman, Alan V. Deardorff and Robert M. Stern -- 9 The Collapse of Communism in the USSR: Cold War Victory or Cold War Illusions? / Peter J. Boettke -- 10 Estimating Regional Sensitivities to Defense Purchases / Lori L. Taylor -- PART FOUR Effects on Less Developed Countries -- 11 Defense Spending and Economic Growth in Developing Countries / Basudeb Biswas -- 12 Arms Imports and Third World Growth in the 1980s / Robert E. Looney and Peter C. Frederiksen -- PART FIVE Related Issues of Importance -- 13 Deterring Terrorism Through Reputation Building / John L. Scott -- 14 The Prospect of Stable World Peace and Its Global Economic Consequences / Anandi P. Sahu and Robert T. Kleiman -- About the Contributors -- Subject Index.