Rising defence spending may lift economic activity modestly in the short term, but it brings additional fiscal strain while effects on long-run growth are uncertain. Lasting economic benefits are more likely if governments improve procurement and pursue broader structural reforms alongside rearmament.
By Ben Congrave and Young-Hyun Shin, OECD Economics Department
Many countries have begun to raise...
The article discusses the economic consequences of increased military spending in OECD countries. While it is acknowledged that larger defence budgets could add modestly to economic activity in the near term, the authors warn that they will also add to fiscal pressures and leave long-term growth challenges unresolved. The article highlights the need for governments to improve procurement practices and pursue broader structural reforms alongside rearmament in order to achieve lasting economic ben...