Peace dividend - Definition

The peace dividend is a political slogan purporting to describe the economic benefit of a decrease in defense spending. It is used primarily in discussions relating to the guns versus butter theory. The term was frequently used at the end of the Cold War, when many western nations significantly cut military spending.

The concept of a "peace dividend" assumes that the budget for defense spending will be at least partially redirected to social programmes and/or economic growth. The existence of a peace dividend in real economies remains unproven. Most economies, in contrast, undergo a recession after the end of a major conflict as the economy is forced to adjust and retool.