—The aim of this paper is to reach sound recommendations for a developing country with regards to optimally balancing defense and welfare expenditures for maximum defense effectiveness in this age of increasing budgetary pressures over defense. The paper analyzes the literature concerning the balance between defense spending and the sum of education and health expenditures, addressed as welfare expenditures in this study for simplification purposes. Then, the mechanism of how a qualified human capital affects the quality of defense as a public good is questioned, which lead the study to the theorization of “defense quality factor”. This paper introduces “defense quality factor” to the literature of defense economics, defined as the multiplier that converts defense resources into defense effectiveness. The functioning of defense quality factor is demonstrated on a theoretical five-term budget allocation model. Finally, the paper concludes with recommendations for the optimal guns versus butter tradeoff decision for a developing country, in consideration of the defense quality factor theory.
—Defense spending, defense quality factor, defense welfare tradeoff, guns versus butter tradeoff.
Emre Dikici is with the Turkish Army War College, Istanbul, Turkey (e-mail: emredkc@ gmail.com).
Cite: Emre Dikici, "Guns Versus Butter Tradeoff: The Theory of Defense Quality Factor," Journal of Economics, Business and Management vol. 3, no. 7, pp. 704-709, 2015.