1988 Reports

The relationship between defense spending and economic performance in Japan

Dekle, Robert

This essay has three aims in evaluating Japan's military security burden. First, the composition of the defense budget of Japan will be reviewed, and an attempt will be made to make the definition of the Japanese defense budget consistent with the NATO definition of the defense budget. Second, the essay seeks to provide a rough measure for the level of defense expenditures "appropriate" to the level of benefits that Japan receives from international security and maintenance of the current world order. Third and finally, the essay shows the results an experiment that will evaluate the effect on Japan's real economic growth of raising the country's defense budget-GNP ratio to the U.S. level of approximately 6.5 percent.