THE IMPERATIVE OF THE MILITARY ECONOMY: INTERNATIONAL TRADE DEFORMATIONS, AND THE DYNAMICS OF THE SHADOW ECONOMY IN THE CONTEXT OF INCREASING SECURITY CHALLENGES

Анотація

The aim of this article is to substantiate a critical analytical framework for assessing the macroeconomic effects of military expenditures beyond conventional fiscal multiplier approaches, with specific attention to their impact on international trade structures, the expansion of shadow-economy segments, and the formation of what may be termed a war-economy imperative. The hypothesis is that the unprecedented synchronisation of military spending increases across OECD and non-OECD states since 2022 generates systemic distortions in international trade that simultaneously intensify the opacity of economic activity, stimulate the growth of informal and shadow market segments, and undermine the effectiveness of standard macroeconomic governance instruments. To verify this hypothesis, the study employs a combination of structural-functional analysis, comparative institutional methodology, and critical synthesis of existing theoretical approaches — from classical and neoclassical schools to endogenous growth theory — to identify their common limitations in addressing the compound challenges of a war economy. The research reveals that military expenditures in contemporary conditions perform a dual macroeconomic function: they act as a fiscal stimulus with uncertain multiplier effects that vary substantially across countries depending on industrial structure, openness, and debt position, while simultaneously reconfiguring international trade flows through import surges, supply chain nationalisation, and the proliferation of sanctions-driven informal trade. The shadow economy dimension of war economics remains critically underresearched: sanctions evasion, informal arms intermediation, dual-use technology smuggling, and unrecorded financial flows constitute a structural feature of contemporary military-economic systems rather than a marginal phenomenon. The article critically demonstrates that existing theoretical models, rooted in the investment-savings problematic of classical analysis, the supply-side crowding-out logic of neoclassical approaches, and the demand-stimulus paradigm of Keynesian theory, all fail to capture the institutional complexity of war economy governance, where the formal and informal, the public and private, and the national and transnational become systematically blurred. The war economy imperative thus emerges not simply as a fiscal or security constraint but as a structural transformation of the institutional architecture of international economic relations.

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