Military spending and fiscal sustainability indicator: Case study for Malaysia

Research output: Contribution to journalArticle

Abstract

The recent budget cuts to military spending in Malaysia may cause concern on the readiness of the country to face future security threat; as such if there is a need to increase military spending in the future to improve military readiness, this need should be balance with the objective of ensuring fiscal sustainability. This study aims to assess the fiscal sustainability in Malaysia using the fiscal sustainability indicator approach, mainly the primary gap indicator, and then compare it to the military spending in Malaysia. Using annual data of primary fiscal balance ratio, public debt ratio, real gross domestic product (GDP) growth, real interest rate, real inflation and military spending from 1981 to 2015, four fiscal regimes were identified; regime 1 (1981-1988) unsustainable, regime 2 (1988-1997) sustainable, regime 3 (1998-2013) unsustainable and regime 4 (2014-2015) sustainable. The conclusion of the study suggests that while there is a need for fiscal consolidation through budget cuts in non-productive sectors such as military to ensure fiscal sustainability and long-term economic growth, this should not be at the expense of the government fulfilling its role as the provider of defence as public good.

Original languageEnglish
Pages (from-to)75-87
Number of pages13
JournalDefence S and T Technical Bulletin
Volume10
Issue number1
Publication statusPublished - 2017

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Sustainable development
Consolidation
Economics

Keywords

  • Fiscal policy Malaysia
  • Fiscal sustainability indicator
  • Military spending
  • Primary gap indicators

ASJC Scopus subject areas

  • Engineering(all)

Cite this

Military spending and fiscal sustainability indicator : Case study for Malaysia. / Wan Suleiman, Wan Farisan; Abdul Karim, Zulkefly; Khalid, Norlin; Ahmad, Riayati.

In: Defence S and T Technical Bulletin, Vol. 10, No. 1, 2017, p. 75-87.

Research output: Contribution to journalArticle

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