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This study contributes to the debate on whether defense spending
encourages or hinders economic growth. The effect of politics on
economic growth in developing societies is assessed, with a focus
on the Middle East. The study is the first to add conflict
variables to the production function defense-growth model and test
them empirically across countries and regions, and provide robust
empirical evidence on the differential effects of interstate and
intrastate conflicts on economic growth. The study provides
compelling empirical evidence and guidelines to policy decision
makers on how to allocate the resources of their states and adopt
policies that promote political economic development. The study
urges Third World leaders to improve levels of freedom, democracy,
and openness of their political systems because the results confirm
that political factors are at least as important as economic
factors in promoting economic growth. Furthermore, the results
attest that the reallocation of resources from military to the
civilian sector is the sine qua non to improve the performance of
developing countries' economies.
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