Does Defence Expenditure Mobilise Resources in LDCs?

Military expenditure in developing countries is large and rising; its economic effects are a matter of vital concern. This article analyses the impact of military spending on the mobilisation of physical resources in less developed economies; resource creation is proxied by the saving‐income ratio. Both theoretical and empirical arguments are provided to show that, though there are some beneficial spin‐offs from defence, the overall impact is to lower the rate of resource creation significantly. This may have sizable negative effect on growth and development.