The Impact of Military Expenditures and Corruption on Economic Efficiency in G20 Countries

The study examines the effects of military spending and corruption on G20 countries' production efficiency from 2006 to 2021. It seeks to understand the forces shaping these economies. It will recommend policies to improve efficiency. This research uses Stochastic Frontier Analysis (SFA) and analyzes data from the World Bank, SIPRI, and the Worldwide Governance Indicators. The study models production efficiency using military spending and corruption. It controls for GDP, labor, and capital inputs and thoroughly analyzes efficiency dynamics. The research shows that higher military spending can cut inefficiencies. For every extra billion spent, inefficiency decreases by 0.28%. A 1% improvement in corruption control leads to a 0.34% drop in inefficiency. These interactions suggest that military spending can boost the economy. However, it harms economic performance in the long run. Moreover, corruption exacerbates inefficiency by diverting resources from productive uses to military spending. This paper shows that military spending has two roles. It can boost the economy, but it can also distort it. The study's findings stress the need for good governance. They offer a complex view to help policymakers. It can guide them in using resources better and promoting sustainable growth.