The Price of Security 

PHOTO: US Africa Command on Wikimedia Commons

How an Outsized Focus on Defence Undermines Long-Term Growth and Stability for Developing States

---

The notion of security holds an amplified status in our political and societal dialogues. ‘Securitisation’ theory posits that the successful branding of individual issues as ‘dangerous’ and ‘threats’ to security can effectively elevate a problem from a low political priority to an existential issue that requires disproportionate action. 

This process is often applied by nationalist rhetoric to issues surrounding international terrorism and migration, generating public anxiety and increasing calls for more militaristic responses. However, securitisation has also been utilised in the framing of climate change to galvanise preventative action: now not just an environmental issue, but a global security threat.

Securitisation is a neutral phenomenon. While it can often amplify incendiary rhetoric and spur ineffective and inefficient investments of resources, there is no doubt existential threats do exist and often require an elevated, collective response. According to security scholars Williams and McDonald, securitisation acts as a “powerful political tool in claiming attention for priority items in the competition for government attention”.

Securitisation is just one of many factors that drive states to invest heavily in their national defence, alongside territorial disputes, power projection, and geopolitical influence. Military expenditure is context-specific, but often a necessary expense for a nation. However, problems arise when a disproportionate level of a country’s resources is allocated to defence expenditure. These risks are greatest for developing countries, which are already often unable to provide enough funds to all sectors of their economy, creating an obstacle to long-term economic growth and prosperity.

Is money invested into military money wasted?

The logic for military expenditure’s negative effect on growth is easy to comprehend. Working-age people, natural resources, and money are diverted from the domestic sector to an industry that is far less economically productive. Studies have shown that higher defence expenditures frequently hinder economic growth and increase income inequality. These externalities are even greater for lower-income countries, where military spending is much more likely to contribute to higher public debt and reduce welfare expenditures.

The crowding-out hypothesis suggests that constrained government resources lead to competition between budget allocation priorities, meaning increases in military expenditure often occur at the expense of other sectors. In lower-middle-income countries, public health expenditures decrease nearly 1% for every 1% increase in military spending. In comparison, this decline is only 0.5% in upper-middle-income countries. 

Military buildups also harm economic growth by taking valued labour out of the civilian economy, such as technical personnel and engineers. Due to the importation of weapons from industrialised states, the technological level of the military often far exceeds that of civilian industry, drawing more workers due to the higher incomes and opportunities. 

This marks one of the largest differences between military expenditure’s effects on developed and developing countries. Developed countries with high-tech militaries are able to offset some of their economic burden through arms exports and the spillover effects of military research and development, whereas developing countries must finance through accumulating external debt or reducing welfare expenditure. 

In 2026, Pakistan raised defence spending by more than 20% to roughly US$9 billion (AU$12.75 billion), making up nearly 15% of the national budget. Pakistan’s already high level of external debt means that interest payments make up 47% of annual spending, forcing the state to cut investment in agriculture, health, and education, as well as raise taxes to fund the increase.

Playing it safe
Military expenditure can definitely have adverse effects on an economy, but defence programs also provide many contributions to a country, and can stimulate growth both in the short and long term. 

Productive civilian investments clearly enhance economic growth to a greater extent than military programs do. For developing countries with more constrained budgets, however, the majority of income is spent on providing basic social investment such as housing or healthcare, with little being put towards productive economic investments. Efficient investment into long-term growth can be extremely hard to accomplish, and many investments operate at uneconomical costs or contribute less to growth than expected. Thus, Emile Benoit states that “one must compare the defense programs with their objectively probable substitutes, not with their optimum substitutes” in order to realistically calculate costs. 

Defence programs are unlikely to stimulate accelerated economic growth, but they can contribute tangibly to economies through non-military initiatives, taking pressure off the civilian sector. For example, military programs often contribute to public services and works the private sector may struggle to provide, such as conducting disaster relief operations, as well as building roads, airports and communication networks.

PHOTO: LCpl Robert J. Maurer on Wikimedia Commons

Intangible Benefits

Perhaps the greatest benefit of a strong military is its intangible effects on the culture and society of a nation. Situations of ‘weak nationalism’, where divided ethnic or sub-national identities are stronger than a shared national identity, are associated with higher political instability and lower economic growth in developing countries. While contexts vary between states, the militaries of developing countries often contribute greatly to ‘nation building’ by providing a shared cultural symbol and inspiring national pride. 

This effect is the most pronounced among the soldiers themselves, even in nations with more authoritarian measures such as conscription programs. By providing a platform for conversation and bonding between people of different ethnic groups and religions, these programs can show notable effects in reducing prejudices and fostering stronger national attachment and unity. 

PHOTO: Master Sgt. Jeremiah Erickson on Wikimedia Commons

Social cohesion has intuitive benefits for an economy, but they are often difficult to specifically identify. A strong driver of economic growth is trust among different local leaders and identity groups. Low trust in a society can lead to suboptimal allocations of resources and labour as a result of discrimination. This can involve businesses refusing to make transactions with each other, or employers refusing to hire the most qualified workers due to factors of identity. When these acts of social incohesion occur, the economic potential of a nation is throttled.

However, military service also poses risks to social cohesion. Under authoritarian regimes or times of conflict, while military service can strengthen national identity, it comes at the cost of undermining civic values and trust in institutions. 

Stability: The most important factor for long-term growth?

Nevertheless, the strongest intangible benefit military spending aims to provide is its simplest. National security, both actual and perceived, is one of the biggest influencing factors for a country’s stability. Security provides sovereignty over borders and decision-making and protection from external threats, which in turn fosters economic predictability and stronger governance. Stability, for political institutions, for economic markets, and for societal cohesion, is the pre-condition for the long-term growth of a nation’s economy.

Political instability involves the extent of challenge by internal and external actors to the distribution of power within a political system. This materialises through regime changes, political violence, mass protesting, and government collapses. Political instability has shown to lower productivity growth rates, primarily due to shortening policymaker’s planning horizons as well as causing more frequent backtracking on policies and investments. 

Instability also affects consumers, discouraging long-term investments due to increased perceptions of risk. In comparison, stable political environments encourage Foreign Direct Investment (FDI) because protection of property rights and the consistent application of laws boosts investor confidence. 

There is no doubt that increased stability is associated with increased economic growth. The question then becomes, does increased military expenditure create increased stability?

It Depends

On its face, the benefits of a strong military for a country’s stability are obvious. Military forces provide protection from external threats, securing the territory, resources, and people of a nation. For countries in regions fraught by insecurity and conflict, strengthening military power as quickly as possible can be more important than prioritising economically productive investments. Nowhere is this better demonstrated than by Singapore’s actions post-independence. 

Following its abrupt independence, Singapore was left with just two battalions of soldiers, less than 2,000 people, and faced security risks from the Konfrontasi, an armed conflict between Malaysia and Indonesia. Singapore introduced conscription for all young adult male citizens in 1967, and by 1971 was spending 6.8% of GDP on defence, nearly 25% of total government expenditure. This number remained high throughout the 1970s–90s, resting between 4–6%. Singapore’s defence grew enough to provide significant deterrence from attack by its larger neighbours. Singapore’s sovereignty and stability were crucial for its modernisation and attraction of foreign investment, allowing its GDP to grow more than 20 times larger since independence.

PHOTO: Seloloving on Wikimedia Commons

However, a national priority on defence often creates more instability than it solves. The biggest risk to instability comes when the military holds significant influence over political institutions. This can occur due to past or current military rule, or more covert corruption of politicians. Lobbying by military groups for non-interference from governments as well as weak oversight into defence matters can entrench corrupt processes, particularly around arms procurement. As military budgets grow larger and leaders richer, their influence over government decision-making is increased. This influence erodes the power of institutions and the rule of law, reducing the barrier to seize power and increasing the risk of regime change. Over 61% of the democracies that died between 1789 and 2008 were ended by a military coup. 

Increases in military spending also risk exacerbating external threats instead of providing greater security. When actions taken by one nation to strengthen its security are viewed as a threat by another, it risks creating a security dilemma, an escalating cycle of military buildup and tension. Driven by disputes surrounding the independence of Western Sahara and Morocco’s designation as a major non-NATO ally, Morocco and Algeria have fallen into an escalating military rivalry. In 2023, Algeria more than doubled its entire defence budget to 8.9% of GDP, the second highest in the world only to Ukraine. In Algeria, this has coincided with a strengthening of military control over political institutions, and annual GDP growth being forecast to fall from 3.8% to 2.6% by 2030. 

Striking the Right Balance

Ultimately, good governance comes not from deciding whether to ignore or prioritise military expenditure, but by investing an amount as close as possible to a country’s optimum: the Goldilocks zone. However, finding the Goldilocks zone can be an implausible task. Governments and policy-makers are not infallible, and information to aid decision-making is never complete. When this lack of rational decision-making is greatest, securitisation can manufacture an elevated sense of threat, causing nations to overshoot the necessary level of response. 

Developing states do not operate with the same buffer as many industrialised states. When budgets are tighter and competition greater, the margin for error is thinnest. Developing states pay the highest long-term price for short-term missteps. The oldest trick of governance is creating an enemy. The hardest is refusing to.