Wars have always influenced economics and politics. Winners of wars have shaped trade patterns and economic institutions. They also influence technological developments. Also recurrent wars drains wealth disrupts market and depresses economic growth.
During most conflicts, level of taxation and public debt increase, consumption as a percentage of GDP decreases, investment as a percentage of GDP decreases and inflation increases. It has been observed that excessive military spending displaces more productive non-military outlays in areas such as investments in education, infrastructure, or high-tech industries. In addition, the excessive spending on military functions affect infrastructure development and service delivery, ultimately affecting long-term rates of growth.
In a short-term, the higher level of government spending during war tends to create some positive economic advantages, particularly through increased economic growth during war spending booms. However, unintended and negative consequences occur either during the war or after the war. The aftermath of war is characterized by demobilised soldiers and debts. For instance, many economies in the world struggled after Napoleonic war, First World War and Second World War.