Tendencies of Defence Expenditure and its Structural Changes in the European Union Countries
Nowadays security is one of the most important things and a hot issue among politicians. The European countries are surrounded by threats and have to be prepared to face instability. For every country it is necessary to ensure internal as well as external security. That is why many policy-makers have to decide how much money should be spent on security. This paper investigates the tendencies of defence expenditure and its structural changes in the European Union countries in the period of year between 2004 and 2012. Firstly, based on the defence expenditure as a percentage of Gross Domestic Product (GDP), the European Union (EU) countries have been classified into four categories, such as high defence spenders, upper middle defence spenders, lower middle and low defence spenders. Secondly, the structural analysis of defence expenditure has been applied in the context of the EU countries’ groups. To that end, the findings suggest the following: 1) over the period of 2004-2012, spending for military defence has dominated in the structure of total defence expenditure of the EU countries; 2) increase in foreign military aid and R&D defence promote growth of the defence expenditure as a percentage of GDP, while the drop in military and civil defence as well as defence n.e.c. impact on decline of total defence expenditure; 3) high defence spenders report increase in the share for military defence, while other groups of the EU countries show decline of this spending; the increase of the share for foreign military aid has been typical for all the EU countries’ groups; 4) high defence spenders have the most significant intensity coefficient of structural changes, while upper middle and low defence spenders’ groups have the least changing defence’s patterns.
Index Terms: defence expenditure, government expenditure, Gross Domestic Product (GDP), structural changes
JEL: C10, H5, O47
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