This paper is aimed to reveal the specific role and the quantitative impact of Military
Industrial Complex (MIC) on the income inequality in accordance with the defense
economy. For decades, there were assertions and discussions about MIC. However, there
appear to be no existing researches on the numerical aspect of MIC. This study fills the
gap by employing the dynamic panel data analysis for 24 countries for the period from
2001 to 2014 with difference and system GMM. According to the literature, control
variables such as indicators of major arms trade and terrorism incidents are selected. In
order to see the impact on income inequality fairly, the dependent variables are chosen
from the set of Theil’s T index based on the household final consumption, Gini coefficient
and Human Development Index (HDI). Based on the empirical analysis, a negative
relationship between MIC and income inequality is concluded, suggesting that an increase
in MIC activity could reduce the income inequality. In addition, the number of terrorism
incidents and the trade openness affects negatively while the amount of major arms trade
has a positive relationship.