Military Spending in Guatemala:
The Fiscal and Microeconomic Impact: 1969-1995

Thomas Scheetz

This research project, launched in 1996, is a joint effort by the Arias Foundation for Peace and Human Progress, located in Costa Rica, and Economists Allied for Arms Reduction (ECAAR), a New York-based organization of economists whose trustees include eight Nobel Laureates.

The goal of the study is to examine the economic impact of military spending on the Guatemalan economy during the last quarter century, focusing on both its macroeconomic and its fiscal effects. The analysis of the data collected contributes to a greater understanding of the role of military expenditures in the Guatemalan economy during an especially painful period in the country's history. At the same time, the results of the study provide Guatemalan society with information useful in defining an institutional framework conducive to democratic consolidation and economic development.

I. Military Spending as a Public Service: A Theoretical Vision

II. Military Expenditure, Economic Development and Social Spending

1. Methodology and Political Implications
2. Macroeconomic Effect of Military Spending
3. Fiscal Effects of Military Spending on Guatemala: Analysis of Fiscal Spending

TABLE 1
Some social indices in Guatemala in the 1990s
TABLE 2
Real growth of military expenditures in Guatemala
TABLE 3
Participation by sector in budget expenditures-Central Government of Guatemala (%)
TABLE 4
Defense Expenditures, Current Revenue and Central Government Spending as a Proportion of GDP in Guatemala (%)
TABLE 5
Labor costs per ministry as a proportion of total expenditures on personnel of the Central Government of Guatemala (%)
TABLE 6
Number of posts and average labor costs per post in the Central Government of Guatemala in 1994
TABLE 7
Spending on military equipment by the Guatemalan Ministry of National Defense (millions of real 1968 quetzales)

III. Some Final Reflections

Annex

cpr@arias.or.cr