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What happened to the peace dividend?

Abstract:

Recent data on military spending indicate a sizable peace dividend has been achieved since 1985. Results suggest that countries that have made sharp cuts in military spending typically have also reduced nonmilitary spending as well as their fiscal deficit, thereby potentially encouraging private investment. There is indirect evidence that military spending cuts have also allowed countries to maintain or increase their social spending in the face of total spending cuts. In contrast, countries that have increased their military spending have also increased their other spending and sharply increased their deficits. Higher military spending may also have crowded out private investment and, for some countries, public investment. These results underscore the role that reducing excess military expenditure can play in securing economic growth.