The Impact of Defense Spending on Georgia’s Economic Growth (Analysis of 2005–2025 Data)

Abstract

The article “The Impact of Defense Spending on Georgia’s Economic Growth (Analysis of 2005–2025 Data)” aims to examine the mobilization of national financial resources, the dynamics of the military budget, and their potential effects on economic growth. The main objective of the study is to analyze how changes in Georgia’s defense expenditures over the past two decades have affected national economic indicators and to identify the sectors — personnel, infrastructure, military equipment, research activities, and educational initiatives — that have the most significant impact on economic processes.

The study employs a combined methodology that incorporates both quantitative and qualitative analyses. This approach allows for a comprehensive assessment of the defense budget structure, spending trends, and comparisons with international practices, as well as an evaluation of their impact on economic growth. The research utilizes data from the National Statistics Office of Georgia, official reports of the Ministry of Defense, international studies, and academic literature.

An important component of the study is the analysis of international experience. The findings suggest that increases in military spending can sometimes stimulate investment and economic activity; however, such effects are often moderate and highly dependent on the country’s economic context. Various authors note that technological modernization and infrastructure projects may positively influence economic development, whereas insufficient efficiency in defense spending may lead to neutral or even negative outcomes. International studies, particularly in small economies, often indicate a moderate or negative impact of military expenditures.

The article also analyzes the segmentation of defense spending: personnel, infrastructure, military equipment, research activities, and educational initiatives. Special attention is given to the distribution of the budget and its effects on economic growth indicators, investment climate improvement, and labor productivity. Additionally, geopolitical conditions and security challenges specific to Georgia are considered, creating a unique economic and strategic context for the country.

The study’s findings provide a solid basis for the formulation of economic and security policies. The results help policymakers make informed decisions regarding resource allocation, military budget optimization, and strategies to stimulate economic growth. The article aligns with international experience and offers valuable insights for strategic and economic planning in Georgia.