Articles
DOI DOI: 10.5281/zenodo.18485547

Defense Expenditure and Macroeconomic Stability under Wartime Conditions. Evidence from Ukraine (2014–2024)

Roman Duzhyi1
  1. 1 National Defence University of Ukraine

Abstract

Abstract: Public capital spending is often treated as a lever for regional development, yet its productivity payoff depends on how well projects are selected, implemented, and maintained. This study evaluates whether higher public investment efficiency is associated with faster regional productivity growth in Poland over 2010–2023. Using a regional panel of 17 NUTS-2 units, productivity is measured through harmonized regional accounts indicators (real labour productivity and related output-per-worker measures). Public investment is captured through government capital formation proxies, while investment efficiency is operationalized with auditable implementation indicators such as capital budget execution and, where available, project completion/timeliness measures. The empirical strategy applies two-way fixed effects to absorb time-invariant regional heterogeneity and common macro shocks, complemented by dynamic specifications to address persistence in productivity. Heterogeneity analyses examine whether the association differs between metropolitan areas, mid-sized regions undergoing structural change, and peripheral regions, and whether effects are stronger when public investment is accompanied by robust private investment activity. The study offers a transparent, replicable framework for assessing the economic returns to public investment management and draws policy implications for improving appraisal, monitoring, and maintenance under fiscal constraints.

How to Cite

Duzhyi, R. (2025). Defense Expenditure and Macroeconomic Stability under Wartime Conditions. Evidence from Ukraine (2014–2024). Transnational Academic Journal of Economics, 2(1), 42–57. https://doi.org/10.5281/zenodo.18485547
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