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Comparative Analysis of Defence Expenditure and Arms Trade by Select Countries: Implications for India

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Indian Journal of Economics and Development
Volume 16 No. 2, 2020, 196-207
DOI: https://doi.org/10.35716/IJED/19135
Indexed in Clarivate Analytics (ESCI) of WoS

Manpreet Kaur1, P.J.S. Pannu2, and Vikas Nath3

1Associate Professor, 2Research Scholar, and Director, Bharati Vidyapeeth Institute of Management and Research, A-4, Paschim Vihar, Rohtak Road, New Delhi-110063

Corresponding author’s email: manpreet3015@yahoo.com

ABSTRACT
Defence is one of the key strategic areas of concern for any country. The ever increasing geopolitical risks are compelling nations to strengthen their defence capabilities. As a result, military expenditure is rising across the globe. This paper is a modest attempt to analyze the pattern of military spending across select countries and its effect on arms trade by them. The result of the t-test of the mean difference showed a significant difference in the average military burden of select countries over the period from 1989 to 2019. The analysis revealed that an upward trend in military expenditure (MILEX) in a developed country like the United States is aimed at acquiring superiority in weapon production. In contrast, China, India, and Israel spend more on the military to enhance their deterrence from threats imposed by neighboring countries and civil wars. However, the military expenditure in Japan followed a consistent pattern since 1990. It was suggested that the Indian defence industry should emphasize indigenization by enhancing the participation of foreign investors and the private sector than escalating military expenditure.

Keywords
Arms trade, defence, indigenization, military expenditure, research and development.

JEL Codes
F18, L64, P52.

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