Financial Economics

Abstract

The purpose of the paper is to use econometric methods to ascertain the main determinants
of rising military expenditure in BRICS countries for the period of 1970 to 2017.The empirical result
of the determinant for military expenditure of BRICS countries from 1970 to 2017 employed the panel
data analysis approach. Based on the detailed theoretical and empirical literature on determinant for
military expenditure, the neoclassical model was considered the best to analyzed determinant of BRICS
countries military expenditure. BRICS countries political economy and security factors were
incorporate for model specification. The determinant for military expenditure for BRICS include
income, population, government expenditure, Security web (average military expenditure of
neighboring countries within BRICS countries), internal threats and external threats. The economic,
political and security factors are included. The empirical result suggest that BRICS countries military
expenditure is mainly determined by its income, population, exchange rate, internal threats, inflation
and political regime (proxy by democracy index). In conclusion, the result reveal that BRICS policy
makers if they are interested in reversing their high unemployment and poverty rate should focus their
attention on these encouraging the local production of their arms/ammunition (military industries)
which will create job opportunities for their teeming youthful population. This result is in line with the
findings of (Tambudzai, 2011), (Brauer, 2002) and Hartley and (Sandler & Hartley, 1995).