THE EXAMINATION OF THE DYNAMIC LINK BETWEEN DEFENSE BURDEN AND UNEMPLOYMENT: THE EVIDENCE FROM THE POST-SOVIET COUNTRIES

Olcay Çolak¹ and Ömer Faruk Bölükbaşi²

¹Usak University Faculty of Economics and Administrative Sciences, Department of Economics, Usak, Turkey

²Recep Tayyip Erdogan University Faculty of Economics and Administrative Sciences,Department of Economics, Rize, Turkey

The Eastern Bloc had been dissolved by the end of the Cold War period, and the New World Order was established. The rapid liberalization process accelerated transition to the free market economy. In this transition period, however, numerous political tensions occurring between some countries also transformed into conflicts and wars. Therefore, countries allocate their scarce resources to their national security rather than their development objectives, simultaneously gradually increasing their defense expenditures. Accordingly, the present study aims to examine the existence of the dynamic relationship between defense burden and unemployment for the selected nine post-Soviet countries that emerged after the collapse of the Soviet Union. By incorporating the annual data set of the nine post-Soviet countries over the period between 1996 and 2021, the results revealed that defense burden had no influence on unemployment in the short run, but did have a positive effect in the long run.

Keywords: defense burden, unemployment, post-Soviet countries, panel data

JEL Classification: C33, F51, H56, P20