DEFENSE EXPENDITURES AND ECONOMIC GROWTH RELATIONSHIP ON THE 101ST ANNIVERSARY OF THE REPUBLIC: ARDL, FMOLS, DOLS METHODS ANALYSIS FOR TÜRKİYE

Abstract

This research examines the relationship between defense expenditures and economic growth in the Turkish economy over the period 1923-2023. ADF (Augmented Dickey- Fuller) and PP (Phillips-Perron) unit root tests are used to find the variables’ levels of stationarity in the research. The relationship between defense expenditures andeconomic growth is analyzed using ARDL (Autoregressive Distributed Lag) bounds test analysis and FMOLS (Fully Modified Ordinary Least Squares) and DOLS (Dynamic Ordinary Least Squares) estimation methods. The findings of ARDL analysis reveal that defense expenditures reduce economic growth in both the short and long run. The analyses conducted with FMOLS and DOLS methods also yielded similar results, which increases the reliability of the findings. The research found that a 1% rise in defense spending slows down economic growth by about 2.93% for FMOLS and 3.38% for DOLS. These consistent results obtained with different estimation methods reinforce the robustness and reliability of the research findings. These results show the negative impact of defense expenditures on economic growth in Türkiye and suggest that defense expenditures should be used more efficiently to reduce this impact.