Does defense spending contribute to building the economy?

When a country enters an arms race or increases its defense budget, some might think at first glance that this is a waste of resources at the expense of education and health, but the economic reality is much more complex than that.

Let’s start with a simple concept in military economics known as Defense Keynesianism (Defense Keynesianism), which is a theory that says military spending can be transformed into an engine of economic activity, but when does this happen? When this spending is designed correctly.

This means that defense is not just consumption; it can be converted into investment in industry, scientific research, and local supply chains.

The United States after World War II is a clear example of this; the American defense project was the main reason for building the modern technological system we see today.

Companies like Boeing, Lockheed, General Electric, and IBM (IBM) found that investing in defense was one of the most important reasons for their development.

The state was spending huge amounts on the military, but in reality, this money was directed towards research, development, engineering, and long-term civil production.

Every dollar spent during that period on defense created jobs, knowledge, and industrial infrastructure that the civilian economy used for several subsequent decades.

However, it is essential to understand that not all defense spending produces the same impact. There is a significant difference between spending on ready-made purchases from abroad and spending on local manufacturing.

The first type wastes hard currency and halts the internal economic cycle, while the second creates real technological demand within the economy and activates networks of local suppliers from small and medium enterprises.

In South Korea, defense spending is not only aimed at deterrence, but is also used as a tool to build a local industrial and technical base.
They do not only manufacture tanks and cannons; they use every military project as a technology lab and training workshops for engineers.

Today, companies like Hanwha (Hanwha) and LIG Nex1 export advanced weapon systems, while also leading electronic and civilian industries that generate billions for the national economy.

Economically, this logic is called Dual Spillover Effects (Dual Spillover Effects), meaning that every defense dollar should serve two roles: once to serve the military mission, and once to feed a civilian production system or technological knowledge.

As for countries that treat defense as a closed spending box, without transparency or an economic vision, they turn the army budget into a financial burden instead of being an economic lever. Money is spent without producing knowledge, without building local suppliers, and without any real investment in research and development.

Therefore, defense spending is neither inherently good nor evil; it is a tool, and how you use it determines its fate.
If you have a system linking defense, industry, universities, and the market, weaponry can transform into a successful technological investment.
But if defense is managed with the mentality of bureaucratic government procurement, you will spend a lot and learn a little, and will always remain a weapon importer, dependent on others for technological protection.

That is precisely the difference between a country that has a defense industry and a country that has a defense budget.

This is an AI-generated English translation. The original text is in العربية