Defense spending in post-liberation Bangladesh: determinants and implications
Titel:
Defense spending in post-liberation Bangladesh: determinants and implications
Auteur:
Rahman, Shamsur
Verschenen in:
Contemporary South Asia
Paginering:
Jaargang 9 (2000) nr. 1 pagina's 57-75
Jaar:
2000-03-01
Inhoud:
This article undertakes an empirical analysis on the determinants of defense spending in post-liberation Bangladesh. Based on a reduced form approach, a time series regression analysis was conducted encompassing data for 1972-1998. To explore the causality nexus, a Granger causality test was performed. The statistical results reveal some important observations, which merit further research and active policy response. The country's growing defense is found to have strong causal linkages with its socio-economic and institutional fundamentals. Macroeconomic distortion, namely inflation, has fueled the defense burden. Likewise, unco-ordinated devaluation is found to have a positive causal association with higher defense expenditure. Foreign aid and loans might have contributed to finance the defense burden, over and above Bangladesh's domestic fiscal capacity. Unabated political instability is seen to have led the country towards a self-fulfilling higher defense burden. Especially, the country's fragile democratic institutional capacity may induce elected governments to higher defense spending to prevent a potential military take-over. The existence of the strong negative externalities of interdependent military expenditures between India and Pakistan on the defense burden of neighbors like Bangladesh is also suspected. Accordingly, Bangladesh should have a positive unilateral interest in mediating the de-escalation of the Indo-Pak conflict.
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