Abstract
D.Litt. et Phil.
If the hypothesis is correct, there will be a reciprocal effect between the military budget and the Gross Domestic Product. The higher the technological level of arms and arms production, the more this reciprocal effect will be interwoven with the process of economic growth. It is measured by input-output figures and the applicable industrial multiplier, calculated from them. Production of high technology arms stimulates growth, the higher the technology, the larger the miltary contribution to the GDP and to economic growth.
From the resultant increase in in the GDP, the income of the State by way of taxes will also grow, subject tro a time lag. The increase in State revenue will return to the Treasury part of the State's original expenditure on defence. My study indicates that the applicable multiplier for defence spending is 3.70 and that the multiplier for arms production is above 4. The part of military expenditure returned to the State will therefore be sizable. Military expenditure is often viewed as competing with socially desirable civil expenditure, as a case of opportunity cost. I argue that oppotunity costs do not apply and that the stimulus economy derived from military expenditure via the multiplier, helps funding social projects along with other civil expenditure. The reasoning in this study can be extended to the funds invested in increasing the capital and technology intensity of the defence force, a modern trend which can be economically justified by the part of the investment that will be returned via the GDP. The way to escape the limitations imposed on defence strength by the availabiluity of manpower is exactly this modernisation of its technology. In this way a medium power can increase its relative strength to the leyel of the "strength threshold" at
which an independent deterrent can be credibly presented. In these terms a critical
value can be defined, expressed as a pecentage of GDP budgeted for defence,
above which a country could be considered militarily safe.