The demand for military expenditure in developing countries

There is a growing body of literature on the determinants of military spending, mostly either starting from the premise of a dyadic arms race, or a welfare maximisation model incorporating economic, political and strategic variables. This thesis takes the latter approach, to analyse a large sample of developing countries for the period 1981-1997. Two cross-section regressions are estimated, one for the Cold War period, one for the post-Cold War, and a panel data model for the whole period. The results of this analysis suggest that military expenditure is roughly proportional to GNP, depends positively on war and the hostile neighbours' milex, and negatively on population and democracy. There is little evidence that the coefficients differ between the two cross-section regressions, but there is strong evidence of a structural break at the end of the Cold War in the panel data results. There is also evidence of regional differences in the results, which suggests that there may be different regional dynamics in the demand for military spending. To investigate further, the South American continent was chosen, and case studies conducted for Argentina, Brazil and Chile for the period 1970-2000. The main strategic influences on milex are hypothesised to be tension between Argentina and Chile and between Peru, Bolivia and Chile, the Falklands war, and Brazil's ambitions as a great power, while national income, debt and inflation are potential economic influences. Another concern is the differing circumstances of democratic transition in the three countries, especially the level of continuing military influence. This is also hypothesised to affect whether the transition led to reduced military spending. To test these hypotheses, ARDL regressions are run for each country. Argentine milex depends positively on GDP, Chilean milex, and post-Falklands rearmament, and negatively on debt and increasing inflation. Brazilian and Chilean milex seem to be independent of GDP, following an upward trend, but both are negatively affected by debt and inflation. There are no significant external influences on Brazilian milex, but some evidence that tension with Argentina affected Chilean milex. Democracy had no effect in Brazil, a clear negative effect in Chile, and a negative effect in Argentina, but only during the Menem administration. Taken overall, the results of the thesis produce a strong and consistent picture that relates the demand for military spending to overall economic resources and to the level of external and internal threat; however, in countries such as Brazil and Chile with strong continuing military influence, an 'institutionalist' understanding may also be needed, with the military seen as a rent-seeking institution

Determining military expenditures: arms races and spill-over effects in cross-section and panel data

This paper considers the determinants of military spending, building on an emerging literature that estimates military expenditure demand functions in cross-section and panel data, incorporating ‘arms-race’ type effects. It updates Dunne and Perlo-Freeman (2003b) using the SIPRI military expenditure database for the period 1988-2003, finding broadly similar results. It also shows differences in results across panel methods, particularly the within and between estimates and illustrates the importance of recognising and modelling dynamic processes within panel data. Heterogeneity is also found to be an important issue and when countries are broken up into groups on the basis of per capita income there is no obvious systematic pattern in the results. This is seen to imply that the demand for military spending, even between two mutually hostile powers, may depend on the whole nature of the relationship between them (and other countries and events in the region), and not simply Richardsonian action-reaction patterns

Understanding American Power:Conceptual clarity, strategic priorities and the decline debate

What does it mean for the United States to be powerful? The prospect of a decline in American power, especially relative to a rising China, has attracted considerable scholarly and political attention. Despite a wealth of data, disagreements persist regarding both the likely trajectory of the US-China balance and the most effective strategy for preserving America’s advantage into the future. This article locates the source of these enduring disputes in fundamental conceptual differences over the meaning of power itself. We map the distinct tracks of argument within the decline debate, showing that competing positions are often rooted in differences of focus rather than disputes over fact. Most fundamental is a divide between analyses dedicated to national capabilities, and others that emphasise mechanisms of relational power. This divide underpins how strategists think about the goal of preserving or extending American power. We therefore construct a typology of competing understandings of what it means for America to be powerful, to show that a strategy suited to bolstering American power according to one definition of that goal may not support, and may even undermine, American power understood in other ways

Military expenditure and debt in South America

The debt crisis that struck South American countries in the 1980s led to severe recession and chronic economic problems. This paper considers one potentially important contributor to the growth of external debt, namely military spending. It considers the experience of Argentina, Brazil and Chile. It finds no evidence that military burden had any impact on the evolution of debt in Argentina and Brazil, but some evidence that military burden tended to increase debt in Chile. At the same time, Chile was the least affected of the three countries by acute financial crises resulting from the debt problems, although its relative levels of debt were as high or higher. This suggests that military burden may be important in determining debt in countries, but it is only of significance when it is not swamped by other macroeconomic and international factors.Military spending, External debt, South America, JEL Codes, H56, F40, O54,