capacity. Some resources previously used by civilians or by other branches of production are transferred to the military field. This could destroy profoundly resources of a country (especially during war times). Research and development(R&D) investments can also be made to improve the military capacity of production. It could then have positive impacts on other production fields. Moreover, more workers will be employed, which might reduce the unemployment rate, but this might also reduce their productive when they will return to a non-military sector of employment, or the unemployment rate could rise again dramatically when the military use will decrease. As a consequence, an increase of military expenditure can create a large variety of economic impacts and externalities, positives and/or negatives (see also: Externality). Security effect In order to invest and innovate, agents should be confident in the economic, its well-being and as a consequence, in the security of persons. During war times or in cases of foreign threats, military expenditure could enable to increase security, maintain the market operations and thus increase output. Indeed, if you look at the world dynamic of military spendings over time, you can clearly identify a positive relation between war or war threat and spendings ; for example during the First World War, The Second World War and the Cold War. However, in some situations military expenditure is rather use to increase exponentially the military industrial complex and to threaten other nations (as it was the case during the Cold War), and can lead to dangerous arms races. See also Militarism Military Keynesianism Military–industrial complex Permanent war economy War economy War finance Immanuel Wallerstein References Militarism Military terminology Military–industrial complex