Resumen de Defence Spending, Institutional Environment and EconomicGrowth: NATO Membership

Francisco Callado, Jana Hromcov, Natalia Utrero

• This paper analyses the impact of participating in a military alliance on the nexus between defence spending and economic growth. In particular, we study how the process of entering a military organization influences the defence spending of newcomers, and consequently their economic growth. Conclusions from the theoretical model are tested empirically for countries in the North Atlantic Treaty Organization. Results show thatwhile defence spending affects negatively the economic growth, this effect is less severe for countries that belong to a military alliance. Empirical evidence supports theoretical priors