THEORETICAL AND APPLIED BASES OF FORMATION OF MILITARY EXPENDITURES IN FISCAL REGULATION OF THE NATIONAL ECONOMY (BRAZIL EXAMPLE)

Abstract

Formulation of the problem. The formation of military expenditures, as one of the key instruments of fiscal regulation in the national economy, is proposed to be considered from the perspective of a comprehensive theoretical-methodological construct that does not fit within the framework of a single economic theory and depends on the chosen research context: the phase of the economic cycle, the quality of state institutions, the level of technological development, and the geopolitical situation. The aim of the research. To analyze the theoretical foundations and develop a practical toolkit for forming Brazil's military expenditures as a component of its fiscal policy aimed at regulating macroeconomic stability and structural transformations, as well as their formalization through the construction of an appropriate econometric model. The object of the research. Fiscal regulation of Brazil's national economy with a focus on military expenditures. The methods of the research. The main methods used in the study include theoretical analysis of endogenous growth models, empirical modeling (OLS), and tests for stationarity and multicollinearity. The hypothesis of the research. Military expenditures can serve as a source of technological innovations and spillovers from the military-industrial complex to the civilian sector, contributing to long-term productivity growth. Military expenditures positively affect growth at an optimal level but generate a crowding-out effect when exceeded. The statement of basic materials. The study covers a theoretical analysis of endogenous growth models, where military expenditures are viewed as a potential source of technological innovations and spillovers from the military-industrial complex to the civilian sector, contributing to knowledge accumulation and productivity enhancement. At the same time, the nonlinear nature of the effects is emphasized: at low levels of expenditures, growth stimulation is observed, while exceeding the optimal threshold leads to the crowding out of private investments and increased fiscal rigidity. In the applied aspect, the specifics of Brazil are analyzed, where institutional constraints and the dominance of current expenditures over capital ones limit the modernization potential of the defense sector. A static (OLS) model was constructed, taking into account endogeneity and growth inertia. The originality and practical significance of the research. The originality lies in supplementing existing meta-analyses in defense economics with a new applied focus on Brazil, emphasizing institutional constraints and expenditure structure. The practical significance is manifested in the development of recommendations for optimizing fiscal policy: reorienting expenditures toward capital and innovative directions, enhancing transparency in budget planning, and balancing with social priorities. Conclusions and perspectives of further research. Further research should be directed toward an expanded quantitative analysis of the multiplicative effects of key Brazilian defense projects and a comparative analysis of budget models with other Latin American countries, which will enable the proposal of general principles for their optimal fiscal regulation.