The paper aims to tackle a controversial issue, namely the anticipated developments
regarding defence expenditure once the Greek economy returns to growth. Such a comeback
is expected to occur following a prolonged recessionary period during which defence spending
cuts were a top priority, as recommended by the IMF, the ECB and the EC, members of
the so-called “Troika”. The paper uses both conventional econometrics as well as neural
networks to consider and evaluate the hierarchy’s ordering of the determinants used in
such a demand for defence expenditure based on their explanatory power. While the role
of property resources is certainly pronounced, as expected, human resources variables also
seem to be able to explain defence spending developments, especially in the recent past.
A forecasting investigation based on this background points to a number of interesting
conclusions on the anticipated developments concerning defence spending in the future as
well as on the determinants of such developments which might represent a threat to NATO
cohesion.
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