Effects of defense spending and government expenditure on economic growth in Persian Gulf countries

Since the Persian Gulf in recent years, utilized more defense through increased military spending, the issue of defense economy has become an important topic in the region. Military equipment's of each country of this region can have both positive and negative effects on the economy, the strengthening of the military power of a country can be considered as an important subject for other countries. This research is descriptive and regression analysis using panel model to analysis effects of military and government expenditures variables on economic growth in selected Gulf states (Iran, Iraq, Kuwait, Bahrain, Oman, Qatar, United Arab Emirates and Saudi Arabia). The period of this study is from 2004 to 2015. The main purpose of the study is to investigate the effect of military spending and government expenditure on economic growth in the Persian Gulf region. The result shows that, the effect of government expenditures on Iran's economic growth has been low on countries such as Saudi Arabia, UAE and Iraq. On the other hand, military expenditure has a negative effect on the region's economic growth, but given that the effect Iran's only military spending is positive and significant on the country's economic growth, and the impact of other countries' military expenditures on their economic growth is negative. It can be concluded that Iran has been successful in allocating military spending more successfully than other countries.