Military spending, security and economic development are interrelated variables. A typically Keynesian argument is that military spending stimulates economic growth like any other fiscal expenditure, benefiting the economy by viz (1) training manpower for future insertion into the labor market (2) modernization of the economy through technologically advanced Defence industries and (3) the construction of highways and other infrastructure. The military is said to promote entrepreneurial leadership qualities in its personnel, presumably scarce among civilian elites, particularly developing countries. All of the aforementioned can be said to be true of Pakistan.
The contra-argument is that while military institutions do contribute to development; the net effect of military spending in the vast majority of underdeveloped countries has been to retard development. A tractor contributes to the grain harvest and a teacher helps increase a country’s human capital, in contrast a tank does not add anything to economic growth (except for its function as part of an "insurance policy" for the country). On the contrary, the tank is a burden that the economy must bear. Dwight D. Eisenhower, 34th U.S. President said, "Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and not clothed." While Defence industries do contribute to economic growth in the developed world, developing countries that import arms manufactured in wealthier countries create a negative burden for their economies’ particularly where debt is incurred to purchase arms. The great recession in the US through the 1930s only ended with the advent of World War 2. Military spending generally has had a negative effect in developing countries that have no indigenous capacity.
Two opposing views have dominated the issue about defence burden viz (1) those who view defence expenditure as a burden on the economy of the country and would rather see greater appliance of resources to the economic sector1 and (2) those who do not see any contradiction between defence, development and economic growth. The major challenge before the Third World countries face is how to maintain a balance between national security needs on the one hand and development and general welfare of the masses on the other. Since resources are scarce, defence effectiveness can only be enhanced at the expense of the other sectors of national well-being. It is paradoxical that the root causes of insecurity are often developmental. Resources provided to the military and security sector due to the failure of sustainable development to take hold can be traced to a lack of human security, civil strife, military involvement in the political apparatus, and a lack of opportunities for effective participation. Many have therefore recognised that security can no longer be seen only in the traditional military sense — but its definition must be widened to also include an emphasis on achieving human security and economic and social stability. Because of the “war on terrorism”, the concept of a conventional military protecting the frontiers against external dangers is giving way to internal security considerations that are tending to be increasingly non-conventional. Insecurity clearly impedes the development process and can destroy the benefits derived from years or even decades of development investments. The recent spate of terrorism attacks on “soft” targets has force-multiplied insecurity. Until there is security for the individual, and society at large, sustainable development will not take hold. Peace can never be won on the battlefield; it must be won on the streets, in homes and within societies themselves.
What are the linkages between security and the development agenda? Competition for access to natural resources, rapid urbanisation, overcrowding, poverty, unemployment, and the breakdown of family and tribal links create tensions and often generate conflict. Then there is the pervasive theme about linkage between insecurity and political extremism, nepotism, and corruption. Many of today’s conflicts are about the control of state resources, fought by criminals and warlords with small arms, Afghanistan is a sorry example, alternating between the frying pan and the fire. Taken in the broader context, security must include eliminating the widespread availability of small arms whose supply is difficult to monitor and control. The following are counted among the adverse effects of defence spending (1) Investment Cost: the defence sector appropriates scarce national economic resources and foreign exchange for the purchase of equipment and other services (2) Productivity Cost: all government-controlled economic activity is wasteful and unproductive. The same amount of resources if invested by the private sector would produce more than those invested by the government (3) Income Shift Cost: the size of the civilian non-defence sector is reduced by the allocation of resources to defence.
There are also some favourable effects of defence spending, viz (1) Training Benefits: A large section of manpower from rural areas are shifted from subsistence to cash economy. Discipline and technical skills, which they receive during training, prepares them for the modern economy and a better life. Their contact with modern behaviour is transferred to their family members, relatives and village folk in their areas (2) Infrastructure Benefits: The military is often called upon to undertake major infrastructure development projects, like roads, railways, airports and communication, which are also used by the civilian population, even in the US, the US Corps of Engineers has been involved in major projects (3) Welfare Benefits: The Armed Forces provide food, clothing, shelter, education and medical facilities to a substantial number of manpower from different areas of the country, this also facilitates unification (4) Security Benefits: Security cannot be quantified or measured in tangible terms. Both internal as well external securities are necessary to provide a peaceful atmosphere for human progress, as well as economic activity. Defence can be ignored only at the risk of anarchy and destruction of the state.
Three of the Four Asian Tigers that have enjoyed sustained economic uplift, S. Korea, Taiwan and Singapore, have maintained large Armed Forces much beyond what their GNP could proportionately sustain. Despite these supposed albatrosses around their necks all three are outstanding models of the Asian economic miracle. The generalized supposition that large Armed Forces are a drag on the economy does not gel with the evidence at hand. The Defence Services also serve as an example of implementing accountability in a country where accountability is considered good enough for lip-service purposes only. The leaders of developing countries such as Pakistan must be encouraged by active accountability to recognize that assuming of office also involves responsibility to ensure that the powers of that office are used for the good of the citizen rather than misused for personal benefit. The laws of the land must be applied without fear or favour that is only possible where accountability in the Armed Forces is conducted through all its rank and file.
Pakistan, with vast needs of defence material, should have been far ahead in production of advanced weaponry and high-tech products within the country. However, an unholy cabal of commission agents acting on behalf of foreign manufacturers and in concert with local technical experts have effectively sabotaged in-country production on one pretext or the other. Any time this country spends foreign exchange to purchase weapons and equipment, that allocation does become dead economically speaking, by having indigenous production of the same, we not only save on the labour cost but divert the salary portion of the product to our own local blue and white collar workers while earning commensurate foreign exchange on the export content. Unfortunately for us it is almost impossible to get rid of the influence of some of these unscrupulous agents who do not hesitate to wine, dine and bribe pliant men in authority to achieve their nefarious proposes, all under a veneer of vocal patriotism, sustained by an old-boy network that remains deliberately and culpably blind to the bribery and corruption. Factors that can contribute to the economy include a pragmatic and innovative cost-effective program of economizing by the Armed Forces themselves. It is well within our potential to force-multiply allocations for Defence Services into an economic asset rather than being a drag on the economy. Given the strait-jacket of the threat perception to our internal and external security, the Defence Services have a positive role to play in the economy. We must intelligently plan our arms and equipment purchases to ensure transfer of technology in such a way that an economic disadvantage becomes a major force-multiplier.