Foreign Capital Flows and Defence Expenditures: Patterns of Causation and Constraint in Pakistan

Robert E. Looney
1998 Revue canadienne d'études du développement / Canadian Journal of Development Studies  
This analysis shows the extent to which defence expenditures have affected the borrowing decisions of the government of Pakistan. Has the government resorted to increased borrowing in these markets to expand allocations to the military? Or, in contrast, have increased defence expenditures tended to restrict access to external credit? Weapons purchased with scarce foreign exchange lead to the availability offewer resources for tbe import of investment goods essential for self-sustaining growth.
more » ... sustaining growth. On the one hand, external financing of defence expenditures would reduce the short-run sacrifices often associated with military expenditures. On the other han~, it appears that international lenders such as the International Monetary Fund (IMF) may be increasingly inclined to restrict lending to countries with high levels of defence expenditures. RESUME Cette analyse montre a quel point les depenses de defense influent sur les decisions d'emprunt du gouvernement du Pakistan. Le gouvernement a-t-il recours a plus d'emprunts pour augmenter les credits militaires ? Ou, au contraire, l'augmentation des depenses de defense tend-elle areduire l'acces aremprunt exterieur ? L'achat des armes avec Ie peu de devises etrangeres disponibles reduit les ressources pour l'importation de bienS d'investissement essentiels a une croissance autonome soutenue. D'un cOte, Ie financement exterieur des depenses de defense reduirait les sacrifices acourt terme souvent lies aux depenses militaires, mais de I'autre, il semble que les preteurs internationaux comme Ie Fond monetaire international (FM!) auraient de plus en plus tendance a imposer des restrictions sur les prets aux pays qui ont des depenses de defense elevees. Public reporting burden for the collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington VA 22202-4302. Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to a penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number.
doi:10.1080/02255189.1998.9669740 fatcat:bk2o4rimirbwnkdtjcnse67rwe