The Impact of Military Expenditures on Economic Growth in Iraq: An Econometric Study (2005-2020)

Abstract

Military expenditures in Iraq constitute a large proportion of public expenditures and are considered one of the factors of the financial deficit. However, they did not contribute positively to economic growth, which caused the misallocation of economic resources and the failure to exploit them in an efficient manner. The basic hypothesis of the study is that there is an inverse relationship between military expenditures and the economic growth in Iraq, and in order to achieve the aim of the study and verify its hypothesis the standard method of practical aspect using the model of ARDL is adopted, taking military expenditures, investment expenditures, the war of ISIS as independent variables, and economic growth as a dependent variable. The study has reached several important conclusions, most notably is the existence of a reverse relationship between military expenditures and economic growth as an increase in military expenditures by 1 percent leads to a reduction in GDP by (- 0.13- percent). In light of this, several recommendations have been made. The most important of which is the need to reduce military operational expenditures by reducing military forces, especially informal forces (military militias) as well as reducing corruption in the military sector, which drains large amounts of government budget.