Financing Defence: The Influence of Defence Budget on National Economic Growth: An Indonesian Case

In our hypothesis the defense budget must reduce the traditional threat and influence the economic. This research would like to see if the defense spending will influence the national economics through economic growth by demand side approach. By assuming the natural balance of power, the traditional threat come not only from military capabilities but also balanced by their economic power. The equation model formed to capture the influence of defense spending to economics growth. The regression describes that military spending had an impact on economic growth. Increase in the level of traditional threat is not reduce economic growth. The Indonesian defense budget give impact on the national economics, and the traditional threat is in small variation. But, the national defense budget still needs to be increased. This makes production could be stable, and the economic actors still feel safe doing the business.