The broad purpose of this report is to review the academic and scientific literature on the factors affecting the quantity and quality of expenditures on defence by members of a military alliance. The motivation for the study is the expectation that countries in the North Atlantic Treaty Organization (NATO) will be facing budget constraints that will impinge on their contributions to collective security. In addition there has been an increasing tendency to rely on “coalitions of the willing” as the dominant organizing framework for recent military missions undertaken by several NATO members outside the European theatre. This evolving strategic environment suggests that NATO member countries may face pressures to rebalance military force structure and procurement in order to meet changing priorities. Specifically, some countries may potentially wish to alter the relative emphasis that they place on national (“private”) and alliance (“public”) military objectives. In addition, engagement in relatively more offensive missions out of the traditional NATO theatres of operation may also generate pressure to rebalance military forces accordingly.
This literature review is structured in the following manner. Section 2 will examine the literature on military alliances and identity insights relevant for the current review. Section 3 will examine more specific examinations of the production and supply of military goods, while a fourth section focuses on the demand side. A concluding section will identify the key lessons that emerge from the review
