Question

Is the expenditure incurred by the state on defence regarded as productive or unproductive? Give one reason.

Answer 1

Defence is a big, economically unproductive consumption expenditure, thus its long-term effects must be negative, either in terms of reduced growth or welfare losses. In the developing world, it tends to lower government socioeconomic spending in areas such as education, housing, health, social security, welfare, transportation, and economy.