Pakistan, Defense Expenditures and External Debt: Patterns of Causation and Constraint
Abstract
Increasing attention is being focused on the role of military expenditures in contributing to the external indebtedness of developing countries. Unfortunately, given the fungibility of funds, it is often difficult to find clear, statistically significant relationships between increases in defense expenditures and the subsequent expansion of foreign liabilities. These dilemmas are reflected in seemingly contradictory results produced by several recent studies of Pakistani borrowing in external markets. On the one hand, cross section analysis (Looney, 1987, 1989; Looney and Frederiksen, 1986) suggests that Pakistan as a relatively resource constrained country might be expected to resort to extensive borrowing to support its level of defense expenditures. On the other hand, time series analysis questions whether external borrowing has been a major factor in funding the country's expanded defense expenditures (Looney, 1991). If anything, this analysis suggests that foreign lender concern over Pakistan's defense expenditures have caused them to cut back on lending to that country.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1995
- Accession Number
- ADA529120
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School