Investment in Research and Development Compared to Military Expenditure: Is Research Worthwhile?

Abstract

Both research and development (R&D) and military expenditure are pivotal areas for any country’s economy. However, most countries tend to spend more on military because of global insecurity and power politics. Nevertheless, this study shows the merit of R&D investment and how it contributes to the national human capital. An analysis was undertaken on the gap between R&D and military expenditure considering the Human Development Index (HDI) and Gross Domestic Product (GDP) of 76 countries for a period of 15 years (2000–2014). Mixed effect models were applied to adjust the effect of six different continents. The results showed that HDI has a positive bi-directional significant relationship with higher R&D investment. National spending on R&D builds human capital, which in turn contributes to public development over the years, unlike military expenditure that only marginally contributes towards GDP and makes no contribution to HDI.

Keywords:

• HDI
• GDP
• human capital
• investment gap
• research
• defense
• investment
• spending
• development
• military

Acknowledgments

We would like to thank the World Development Bank, who allows free access to their database. Also, we express our gratitude to the Faculty of Health, Engineering and Sciences (HES) of the University of Southern Queensland for the technical support. We would thank the anonymous reviewers for providing constructive criticisms and relevant references to enrich the article.