Jean-Claude Berthélemy

Military expenditure and economic development: An endogenous growth perspective

This paper attempts to analyse the interrelationships between government and military expenditure and economic growth in particular, and between security and development in general, in a new framework. It has three novel features. First, the impact of military spending (as well as any other government spending which has similar externalities) is studied in an endogenous growth framework unlike most of the previous research in the field. Second, growth, welfare and security effects are studied simultaneously. Third, simulation studies are made for specific countries to capture long-term steady state effects which are difficult to analyze in longitudinal case studies.

Human capital and growth: The cost of rent seeking activities

The existence of a positive impact of human capital on economic growth is not conttroversial at the theoretical level. In the neoclassical growth model, human capital can be considered as an additional production factor, alongside physical capital and unskilled labor. In the new growth theory, it is assumed that human capital plays a role as an engine of growth that increases total factor productivity (TFP), in particular within R&D activities that produce innovations.

Policies for Economic Take-Off

. Political commitment is the key ingredient needed for economic take-off and long-term growth. Poor countries will be unable to escape the vicious circle of poverty unless they and the international community join forces. . Inappropriate financial policies can lead to a decline in and poor allocation of savings, subsequently holding back growth. . Trade liberalisation not only strengthens growth, but also enhances the effectiveness of other economic policies. . Basic education is a prerequisite for economic take-off, just as the subsequent training of skilled labour is one of the keys to long-term growth. . Policies aimed at fostering long-term growth must be complementary; mistakes in one area can totally undermine efforts made elsewhere.

The Disarmament Dividend

. In 1990-1991, worldwide military expenditure amounted to

Quelles politiques pour un décollage économique

950 billion. This bill could be reduced by the year 2000 by over

Economic Growth, Convergence Clubs, and the Role of Financial Development

300 billion.. . Excessive military expenditure jeopardizes development prospects. . Policies to achieve transparency and to strengthen military security arrangements should be a priority. . Excessive military expenditure is stimulated by supply-side pressure on the part of producer countries, including a number of OECD Member countries. . Donors should consider concerted incentive policies such as defence conditionality in economic aid.

THRESHOLDS IN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH

• La volonte politique est la cle du decollage et de la croissance a long terme : sans la combinaison des efforts des pays pauvres et de la communaute internationale, ces pays ne sortiront pas du cercle vicieux de la pauvrete. • Des politiques financieres erronees peuvent conduire a la chute de l’epargne et a sa mauvaise allocation et, par suite, bloquer la croissance. • L’ouverture commerciale renforce non seulement la croissance mais aussi l’efficacite des autres politiques economiques. • L’education de base est une condition prealable du decollage, de meme que, par la suite, la formation d’une main-d’œuvre qualifiee est l’une des cles de la croissance a long terme. • Les differentes politiques de promotion de la croissance a long terme sont complementaires : des erreurs dans un domaine peuvent reduire a neant les efforts consentis par ailleurs.