Guns, Economic Growth and Education During the Second Half of the Twentieth Century: Was Spain Different?

Abstract

In the past decades, numerous studies have been conducted on the trade-off between guns and butter, namely defense versus social sector expenditure. The aim of this research is identifying whether indeed defense spending crowded out investment and other social expenditures as health and education. Previous research does not yield strong and unambiguous evidence of neither positive nor negative effects of military expenditure on social spending. It is striking that the guns versus butter dilemma has not been extensively studied for Spain. Using Mintz and Huang (1991) strategy applied to the US, we test if the government expenditure in defense in Spain during the last part of the Franco’s dictatorship and the first years of the transition and democracy, contributed positively or negatively to education spending. Results show a negative trade-off for the Franco’s regimen and an ambiguous effect for the last part of the sample.

Keywords: guns versus butter dilemma, military spending, economic growth and social expenditures, education spending

JEL Classification: H51, H52, H53, H56, N40, N44