Military expenditure and economic growth in the largest military spending country: Using machine learning analysis

Abstract

The research conducted a comprehensive analysis of the relationship between military expenditure and economic growth in the United States. The findings revealed a significant negative correlation between increased military spending and GDP growth, indicating that as military expenditure rises, the rate of economic growth tends to decline. In contrast, the study identified a positive relationship between GDP growth and gross national expenditure when military spending is excluded. This suggests that investments in civilian sectors may yield better returns for economic expansion. Additionally, the analysis highlighted that inflation serves as a detrimental factor for GDP growth, often eroding purchasing power and destabilizing economic conditions. On the other hand, real interest rates and gross savings were found to positively influence GDP growth, suggesting that higher levels of savings and favorable interest rates can create a conducive environment for economic development. Based on these findings, the study recommends a reevaluation of military spending policies, advocating for a reduction in military expenditure to a level not exceeding 3.5 % of GDP. Such a shift could potentially redirect resources towards more productive sectors of the economy, fostering sustainable growth and enhancing overall economic stability.