This study aims to investigate the effect of corruption on military expenditures in three income level countries. An annual data series of 97 countries covering high-income, middle-income, and low-income regions from 1997 to 2015 is used.
The cross-sectional dependency and integration property of the data series was checked before applying the generalized method of moments approach to test the model.
The results of the system generalized method of moments approach suggest that corruption increases the military budget of high-income countries, whereas corruption reduces the military budget of the middle- and low-income countries.
This paper offers some substantial implications for the policymakers of each income group to curb corruption and improve economic development.
