Domestic political and external security determinants of the demand for greek military expenditure

By European Union and NATO standards, Greece consistently allocates substantial human and material resources to defence. The Greek defence burden (i.e. military expenditure as a share of GDP) has invariably been appreciably higher than the EU and NATO averages. The paper applies an autoregressive distributed lag model (ARDL) to present cointegrated estimates of the demand function for Greek military expenditure, in which domestic political factors and external security determinants are incorporated. Our empirical findings suggest that Greek defence spending over the period 1960-1998 has been influenced by both external security concerns, namely Turkey, as well as changes in the domestic political scene.     

Does Military Spending Explode External Debt in Pakistan?

This paper investigates the effect of military spending on external debt in case of Pakistan for the period of 1973–2009. For this purpose, the autoregressive distributed lag bounds testing approach to cointegration is used to examine cointegration among the variables. The ADF, P-P, and ADF-GLS unit root tests are applied to test the integrating order of the variables. The Ordinary Least Square (OLS) and error correction method regressions are used to investigate the marginal impact of military spending on external debt in the long and short run. Our findings indicate the existence of cointegration that confirms the presence of a long-run relationship among military spending, external debt, economic growth, and investment. Further, our results reveal that a rise in military spending increases the stock of external debt; an increase in investment also increases external debt; however, there is an inverse effect of economic growth on external debt. An implication of the findings reported herein is that there is a need to formulate a comprehensive economic policy for curtailing external debt in case of Pakistan.     

Development and conflict in the Balkans: Catch-up and military expenditure

This paper analyses the convergence between countries in relation to the catch-up hypothesis concerning the level of total productivity. The catch-up hypothesis claims that poor countries tend to grow faster than rich countries through the international diffusion of knowledge and technology. We test this hypothesis for the Balkan countries and investigate the effect of military expenditure in the region on productivity growth. The aim is to investigate empirically whether productivity growth has been greater in countries with lower military expenditure, in line with theory. The results obtained show that, overall, improvements in technological change co-exist with deteriorating technical efficiency change and that there is a negative correlation between military expenditure and either total productivity growth and technological change, and a positive, but statistically insignificant, relationship with technical efficiency change. We conclude that economic growth is the key to regional development and that too great a diversion of resources to military commitments can lead to overstretch.     

The demand for military spending in the peripheral economies of Europe

Research on the factors that determine the level of military expenditure or military burden in countries, suggest that the dynamics of the determinants of military spending will be best understood by case studies of individual countries and studies of groups of relatively homogeneous countries. This paper provides a comparative analysis of three of the EU's peripheral economies - Greece, Portugal and Spain. A simple model based on a general theory of the demand for military spending provides the basis for an investigation of the relative importance of strategic and other social and economic factors for the three countries.     

Evaluating the trade‐off between military spending and investment in the United States

Using tests of a single equation model and cointegration techniques, this paper finds no evidence of a long run trade‐off, and some evidence of a short‐run trade‐off, between military spending and investment in post‐World War II United States data. The short‐run trade‐off is confined to the 1949–1971 period, and may be the result of the sharp expansion and contraction of military outlays in connection with the Korean and Vietnam Wars. In addition, cointegration techniques are used to identify a possible long‐run trade‐off between military spending and consumption.     

Military expenditure and economic growth: peru 1970–1996

The present study examines the effects of military expenditure on growth in Peru in the period from 1970 to 1996. By using a Deger‐type Simultaneous Equations Model it is possible to break up the net effect into supply‐ and demand‐side influences. The former consist of positive externalities of defence activities on the other sectors of the economy, while the latter can be described as crowding‐out of civilian investment. Estimations find the supply‐side effects to be insignificantly different from zero, while the crowding‐out effect of defence spending is significant and substantial. It is thereby established that defence expenditure has a negative overall effect on economic growth in Peru. Although several caveats – including specification problems of the Deger model, the quality of the data used, a relatively small sample and the presence of autocorrelation in the estimations – must be considered, these results turn out to be quite robust with respect to estimation methods (3SLS, 2SLS, OLS) and slight modifications to the model. They are also consistent with previous empirical findings from other countries and cross sectional studies.     

Is there a Greek‐Turkish arms race?: Evidence from cointegration and causality tests†

Greece and Turkey are both members of NATO and are two of the principal players in the Balkan region. Their respective defence burdens (i.e. the share of military expenditure to GDP) are the highest in NATO. Their bilateral relations are marred by serious friction and conflict of interest and have on a number of occasions come close to an armed confrontation. Their strategic interaction and mutual weapons build‐up has recently attracted the attention of researchers in the field testing the hypothesis of a Greek‐Turkish arms race with conflicting results. This paper, using cointegration and causality tests, finds evidence of a systematic armaments competition between the two countries provided that a defence policy regime shift estimated to occur in 1985 is explicitly taken into consideration. This policy regime change is associated with the stagnation of defence spending in Greece owing to the gradual deterioration of Greek public finances over the last decade.     

ECONOMIC GROWTH AND VIOLENT INTERNATIONAL CONFLICT: 1875–1999

This paper extends the joint product model of military alliances to apply to the new strategic doctrine adopted by NATO in the 1990s. In particular, a choice must be made between protecting one's own territory and pooling forces for an alliancewide rapid reaction force. This new model accounts for a host of externalities and their implications for burden sharing, full financing, and allocative efficiency. The Pigouvian taxes that adjust for force thinning and attack deflection are shown to finance optimal border‐protecting forces under a variety of circumstances. Second‐best considerations arise owing to the pure publicness of rapid reaction forces. The ideal toll arrangement does not currently characterize NATO financing, nor is it likely to do so.     

The inherent propensity toward peace or war embodied in weaponry

Thomas Schelling argues that armed adversaries face an inherent propensity toward peace or war embodied in their weaponry, geography and military organizations. Inherent propensity is the idea that there are characteristics embodied in the weapons that push adversaries toward peace or war, independent of the goals of the decision‐makers, the political disagreement between adversaries, and misperceptions about mutual resolve and hostility. We theoretically illustrate inherent propensity in conventional and nuclear arms settings using Lanchester and Intriligator war models. Our work extends the Intriligator‐Brito model, identifies when the competing Richardson and Intriligator‐Brito views of the relationship between arms races and war are correct, illustrates the stabilizing/destabilizing effects of alliances, and highlights the importance of arms quality control in the US‐USSR relationship.     

Economic Development and Military Effectiveness

Abstract

What makes some states more militarily powerful than others? A growing body of research suggests that certain ‘non-material’ factors significantly affect a country's ability to translate resources into fighting power. In particular, recent studies claim that democracy, Western culture, high levels of human capital, and amicable civil-military relations enhance military effectiveness. If these studies are correct, then military power is not solely or even primarily determined by material resources, and a large chunk of international relations scholarship has been based on a flawed metric. The major finding of this article, however, suggests that this is not the case. In hundreds of battles between 1898 and 1987, the more economically developed side consistently outfought the poorer side on a soldier-for-soldier basis. This is not surprising. What is surprising is that many of the non-material factors posited to affect military capability seem to be irrelevant: when economic development is taken into account, culture and human capital become insignificant and democracy actually seems to degrade warfighting capability. In short, the conventional military dominance of Western democracies stems from superior economic development, not societal pathologies or political institutions. Therefore, a conception of military power that takes into account both the quantity of a state's resources and its level of economic development provides a sound basis for defense planning and international relations scholarship.