Transitioning Towards a "War Economy": A Political Economy Analysis of Public Expenditure Reallocation amidst Escalating International Conflicts

Abstract

The study examines the issue of the “war economy” as a fundamental transformation in the structure of the contemporary international system. It focuses on analyzing the economic and political dimensions of the shift in public spending from civilian and developmental sectors to the military-industrial sector. The research is built on a central hypothesis that the continuous escalation of geopolitical tensions has led to the adoption of fiscal policies characterized by increasing militarization. This, in turn, has imposed significant costs on the global economy, resulting in the depletion of human resources and the erosion of the social contract between the state and society. The study aims to provide a critical perspective that seeks to achieve a balance between the necessity of strengthening states’ defense capabilities and safeguarding human security objectives. This is pursued through proposing a comprehensive practical framework that integrates legislative and executive recommendations, contributing to the preservation of sustainable development gains. This approach is situated within the context of a turbulent and rapidly changing world. The study adopts a descriptive-analytical approach to identify the dynamics of structural transformations in public budgets, alongside a deductive method aimed at assessing the socio-economic impacts of these transformations. Among the most prominent consequences are the phenomena of “social depletion” and “structural unemployment,” resulting from the decline in investments in vital sectors such as education and healthcare. The study also incorporates a comparative statistical analysis reflecting the “welfare gap.” The main findings indicate a positive correlation between the rise in military expenditure, on the one hand, and the increase in public debt and unemployment rates, on the other.