Despite the tremendous increase in oil revenue and Military Expenditures in the Gulf region after the second and third oil prices revolutions (1980 and 2003), the relationship between them is not studied fully. This paper studies the effect of the oil revenue on the regional security measured by the Military Expenditure in that region. The analysis suggests that oil revenue is positively affecting Military Expenditure, however; it is not the only factor that determines it. Population, past Military Expenditure, and conflict seem to play more important roles in determining it. Also the region exhibits an increase in its marginal propensity to spend on defense in the long-run, which might lead to devastating results economically, socially, and militarily.
(*) Mohaned Talib Al-Hamdi is of Iraqi origin and works as Assistant Professor in the Department of Economics, Kansas State University Manhattan, KS 66506 United States of America