Relationship between Military Expenditure and Economic Growth in ASEAN: Evidence from Indonesia


  • Tangguh Chairil Indonesia Defense University
  • Dedy Sinaga Indonesia Defense University
  • Annisa Febrianti Indonesia Defense University



World military expenditure in post-Cold War world shows increasing trend especially in ASEAN region; Indonesia is no exception. The trend may have been supported by the argument that military expenditure has positive multiplier effects on economic growth. Unfortunately, there have been not too many studies on the effect of military expenditure on economic growth in the Indonesia context. This paper examines the topic by first reviewing literature on the relationship between military expenditure and economic growth, then by empirically testing the causal relationship between the two variables by using the Augmented Sollow Growth Model. The result shows that Indonesia's military expenditure has positive effect on the country's economic growth, which is most possibly caused by development of human capital as effect of military expenditure.


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Author Biographies

Tangguh Chairil, Indonesia Defense University

Tangguh Chairil earned his bachelor's degree in International Relations from Universitas Indonesia in 2011 and master's degree in Defense Economics at the Indonesia Defense University in 2013. His thesis is titled "Determining Factors of Proportion of Military Expenditure as Percent of Gross Domestic Product of Countries: Cross-Country Statistical Analysis". Currently, he is acting as Special Assistant to the Director of Maritime Security Studies Program at the Indonesia Defense University

Dedy Sinaga, Indonesia Defense University

Dedy S. Sinaga received his bachelor's degree in Economics from Universitas Indonesia in 2009. He then received scholarship from the Ministry of Defense of Republic of Indonesia in 2011, to pursue postgraduate study in Defense Economics at the Indonesia Defense University. His thesis is titled "The Impacts of Defense Spending Increase on Economic Growth, Inflation, and Employment in Indonesia: Simulations Using Computable General Equilibrium". Currently, he is working at the Indonesian central bank.

Annisa Febrianti, Indonesia Defense University

Annisa I. Febrianti received her bachelor's degree in International Relations in 2011 from Universitas Paramadina. She earned the best International Relations graduate student in the 5th Judicium of Universitas Paramadina. She received scholarship to continue postgraduate study at the Indonesia Defense University. She earned her master's degree in Defense Economics in 2013. She focused her study in the defense industry. Her thesis is titled "The Impact of Defense Offset Towards the Indonesian Defense Industry: Case Study of PT. Pindad". She has also conducted research about United Nation Peacekeeping Operation in Nepal.



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