COUNTRY SURVEY-X - DEFENSE SPENDING IN TURKEY

This paper provides a country survey of the Turkish defence economy. T urkey is a member of NATO alliance and is strategically located betwee n Europe and Middle East. Moreover, Turkey has a high defence burden a nd high economic growth. The first part of the survey presents a brief economic background of Turkey, its armed forces, the defence industry , its modernisation and trends in Turkish defence expenditure. The res t of the paper focuses on the relationships between defence spending a nd economic growth. The effect of defence spending on economic growth is econometrically estimated using a supply side model. Both externali ty effects and the size effect of defence spending are estimated for T urkey. The study concludes that defence expenditure stimulates economi c growth while externalities from the defence sector to the rest of ec onomy are negative for Turkey.