The purpose of this study is to reinvestigate the relationship between defence expenditure and economic growth in Malaysia, over the period from 1960 to 2006. The bounds testing procedure is used to examine the long-run equilibrium relationship between defence expenditure and economic growth. The bounds test suggests that the variables are co-movement in the long run, but defence expenditure and economic growth is negatively correlated in both the short and long run. Moreover, the MWALD test shows bilateral causality evidence.  Source: ICFAI Journal of Public Finance; May2008, Vol. 6 Issue 2, p45-51, 7p. Author: Tang, Chor Foon.