A Comparative Study On The Impact Of Defense Expenditure On Economic Growth In China And U.S Under Different Defense Strategy Backgrounds

How to reasonably distribute limited resources between defense sector and civil sector is a major practical issue that governments around the world have to face.The relationship between economic growth and defense expenditure has been extensively studied but its findings can't reach a clear consensus.Moreover,most current literature consider defense strategy as an exogenous factor,ignoring the fact that under different backgrounds of defense strategy,defense expenditure have different impacts on economic growth.The theme of this article is to research on the economic growth effects of defense expenditure in China and U.S.under different defense strategies.Through comparative study between the two countries,this research expects to investigate the effect of defense strategy in the way of defense expenditure impacting on economic growth,and to find out the problems and shortcomings of China's defense expenditure policy and defense industry.This article can provide theoretical and practical reference on improving economic performance of defense expenditure,planning economic construction and defense construction as a whole,and realizing a rich economy united with a strong army.This research uses the method of comparative study and the method of qualitative and quantitative study to analyze and compare the economic growth effects of defense expenditure between China and U.S under different backgrounds of defense strategies.The main content of this article includes:(1)the concept and categories of defense strategy.This article emphasizes three determiners of defense stragegy,which are state interest,national grand stragety and national security strategy,comprehensive national strength.On the basis of this concept,classify different defense strategies into four categories: global deterrence,active defense,alliance defense,and neutral defense.(2)tease the adjustment and evolution of the defense strategy of US and China since the Second World War,concluding that the guilding ideology of the two countries' defense strategy(global deterrence and active defense),and different methods of building and operating defense force in these two countries under the guidance of different defense strategies.(3)quantize defense strategy in empirical model,testing and comparing the difference of economic contributions of defense expenditure between US and China under different strategic backgrounds.Results show that total defense expenditure displays a significant positive effect on economic growth of US for both short and long run,but the effect of its overseas defense expenditure on economic growth is negative.In contrast,there is no significant defense expenditure effect on economic growth for China.(4)based on the strategy of active defense,put forward feasible policy suggestions for China: keep reasonable scale and growth of defense expenditure,coordinating economic development and defense development;optimize the structure of defense expenditure,enhancing the quality and efficiency of the modernization of national defense and army building;deepen the reform of national defense business entities,forming a develop pattern of deep civil-military integration.The innovation points of this article are embodied in three aspects.First,make preliminary discussion on the mechanism of action between defense expenditure and economic growth under different defense strategies.On the basis of defense expenditure demand equation of neoclassical economics,this article deduces the general type of the equation and discusses different effects of different defense strategies on the scale of defense expenditure.Then,analyze the three approaches of defense expenditure influencing economic growth,which are demand effect,supply effect and security effect.Second,bring defense strategy into empirical model,and resuls show that under different defense strategies,the effects of defense expenditure on economic growth between U.S.and China are indeed different.Third,this study respectively uses the autoregressive distributive lag bounds testing(ARDL)and the vector error correction model(VECM)to identify not only long-term but also short-term effect among variables of both countries.Investigating both long-term equilibrium and short-term dynamics makes the result of this research more accurate and more meaningful.