The Gravity of Arms

The aim of this paper is to investigate the determinants of international arms transfers in a gravity model framework. By distinguishing between the decision to export arms (extensive margin) and the value of the arms exported (intensive margin), while also considering its interdependence, is what differentiates this paper from previous research. A theoretically justified gravity model of trade augmented with political and security motives is estimated using a two-stage panel data approach for 104 exporting countries over the period from 1950 to 2007. In addition to the usual gravity variables related to the economic mass of the trading countries and the trade cost factors, the model is extended with political and security factors. The level of democracy in both trading partners, political differences between trading partners and voting similarity with the United States in the UN General Assembly of the countries engaged in trade are the main political factors, whereas the existence of conflicts, military pacts, and embargoes are taken as security motives. The key result indicates that both political and security motives are an important determinant of an arms trade, but their effects on the extensive margin of exports (the decision to order a transfer) differs from their effect on the intensive margin (average value of exports). Moreover, the relative importance of the factors under study has changed since 1989. In the post-cold war period, countries that are less democratic are more likely to export arms, military pacts are less relevant and embargoes play a role.     

Introduction

The French defense policy has been considered unique among western countries. This policy relies on the concept of ‘strategic autonomy’, which is based on nuclear deterrence, autonomy of action, independence of defense industry, and arms exports. From an economic perspective, it implies major consequences both at the macroeconomic and microeconomic levels. Given its importance, it is crucial to use economic expertise to provide insights on defense policy.     

The economic effects of international trade in armaments in the major western industrialized and developing countries†

We have used the Michigan Model of World Production and Trade to assess the impact of exports and imports of armaments (based on 1980 data) on sectoral trade and employment and other economic variables in the major Western trading countries. If the United States were to place a unilateral embargo on its arms exports and imports, we calculate that it would experience a comparatively small amount of employment displacement in the aggregate and that most of this displacement would occur in the transport equipment and electric machinery sectors. If all the major Western countries were to place a multilateral embargo on their arms trade, the sectoral effects on the United States would be similarly small. But the sectoral effects in several other industrialized and developing countries measured as a percentage of sectoral employment, would be larger, indicating potential short‐run adjustment problems in labor markets in some cases.     

The Determinants of Arms Production

This study analyzes the determinants of arms production in 15 countries using annual panel data from 1997 to 2002. The results suggest that real GDP per capita, military expenditures, arms exports, and arms imports are positively related to arms production.     

Remaking the military industrial relationship: A French‐American comparison

Defense industrial complexes in leading Cold War nations have downsized and reallocated resources to other productive activities in the 1990s. In this paper, we analyze the experience of two key countries ‐ the US and France. Comparing the two countries, we find similar outcomes in budgetary retrenchment and large firm restructuring but marked differences in the pace of downsizing and diversification among small and medium‐sized firms. We hypothesize that three sets of contextual differences may explain these differences: 1) institutional differences in the way that the State bureaucracies ‐ the Pentagon and the French Délégation générale pour l'armement (DGA) ‐ oversee defense industrial matters, 2) differences in military industry ownership and firm size patterns, and 3) differences in the regional distribution of defense industrial capacity and associated regional policies. In closing, we note that the two countries’ defense industrial complexes are becoming more alike and speculate on the significance of invidious competition and interactions between them. We address briefly the future of French/American arms industrial competition and cooperation, given the trend towards transnational security arrangements and defense industry globalization     

“Made in China”: an emerging brand in the global arms market

Possession of a brand is a sine qua non for economic success, not least because it connotes trust in delivering the value promised. Although Western arms exporters offer branded systems whose sales are influenced by price, there is a plethora of other economic variables, such as offset requirements and life-cycle support. Entrants to the international arms market will struggle without such arms “packages.” China’s entry, however, goes beyond the traditional economic paradigm. A four-stage historical model offers the backdrop for identifying the drivers that have forged its market entry into 55 countries worldwide. The strategy initially focused on sales of rudimentary military equipment for political purposes, but recently it has begun to commercialize exports, repositioning them from a low- to a high-tech sales trajectory. A Sino “brand” is thus emerging, reflecting both competitiveness and diplomatic considerations, especially non-interference in client state domestic affairs.     

Growth recovery after civil conflict: a fractional integration approach

Using recent econometric techniques based on fractional integration, we find that developing countries recover their economic growth faster than developed countries in response to a shock. Following this methodology, we find that longer civil conflicts are associated with a faster recovery process. We further investigate this issue by exploring correlations with components of GDP, military spending, institutions and aid and find heterogeneous effects of these channels by duration of conflict. Higher government spending is correlated with faster recoveries post longer conflicts, and higher consumption spending is linked to faster recoveries following shorter conflicts. Military spending appears to be driving the government expenditure that makes countries recover from longer conflicts. More democratic institutions are associated with faster recoveries post short wars but slower recoveries following long wars.     

Trinitarian troubles: governmental,military, and societal explanations for post-1945 Western failures in asymmetric conflicts

It seems paradoxical that powerful Western states are at their most vulnerable when the disparity in military capabilities between them and their opponents is at its largest. Yet it is precisely in such ‘asymmetric conflicts’ that Western countries have failed to achieve their overall political objectives the most often. Focusing on the post-1945 world, this article will examine governmental, military, and societal reasons for Western failures in asymmetric conflicts. Politicians' lack of understanding regarding war's fundamental nature, militaries' tendency to dissociate operational goals from grand strategy objectives and citizens' moral aversion to warfare appear to be among the main obstacles to success.     

Potential and actual arms production: Implications for the arms trade debate

In this paper I develop indices and rankings of potential and actual arms production for about one hundred and fifty countries for data pertaining to the early to mid‐1990s. The countries’ ranked indices are then compared. I find evidence that countries that can produce arms (potential) do produce arms (actual). I also compare the current findings to findings published nine years ago, pertaining to potential and actual arms production in developing nations for the early 1980s. A number of countries then having the potential to produce arms have, in fact, become major arms producers ten years later. The results presented in this paper carry policy implications for the arms trade debate: shall policymakers continue to focus on arms supply restriction and continue to ignore the increasing capacity of developing nations to self‐supply their arms demand?     

The benefits and costs of the UK arms trade

A benefit‐cost framework and the associated evidence is used to evaluate UK arms exports. Two issues are examined in detail. First, trade externalities; and second, a case study of the problems and costs of maintaining the UK submarine industrial base without exports.     

Optimal versus required defence expenditure: The case of the Greek-Turkish arms race

The aim of this paper is to indicate the extent to which the arms race against Turkey, in which Greece and Cyprus have been entangled, imposes a defence expenditure burden that is tough for the two allies to bear. To do so we have resorted to evaluating the optimal military expenditure for the two countries, allied in the context of the Integrated Defence Doctrine, which is compatible with the constraints imposed by the resources of their economies. All experiments and scenarios examined lead to the conclusion that the current defence burden of the two allies seems to be driving their economies beyond capacity limits. The fact remains, however, that under the circumstances, a one-sided disarmament policy like the one currently followed by Greece, is a risky choice given that the long-term armament programmes pursued by Turkey, whose role in this arms race has been proven as leading, leave very small room to the Greek and Cypriot sides to reduce their own defence expenditure.     

MODELLING THE RELATIONSHIP BETWEEN DEFENSE SPENDING AND ECONOMIC GROWTH FOR THE FIJI ISLANDS

The goal of this paper is to examine the nexus between GDP and military expenditure. We model this relationship within a multivariate framework by including exports in the model. We use the recently developed bounds testing approach to cointegration and find that there is a long run relationship among the variables when GDP is the endogenous variable. Normalizing on GDP and using four different estimators, we find that in the long run both military expenditure and exports have a positive impact on GDP. Finally, using the Granger causality test, we find that there is evidence for military expenditure Granger causing exports and exports Granger causing GDP, implying that military expenditure indirectly Granger causes GDP in the short run. In the long run, we find that both military expenditure and exports Granger cause GDP for Fiji. Our findings are consistent with the Keynesian school of thought, leading us to derive some policy implications.     

ON THE USE OF TERROR WEAPONS VERSUS MODERN WEAPON SYSTEMS IN AN ARMS RACE BETWEEN DEVELOPED AND LESS DEVELOPED COUNTRIES

Some of the most active arms races are taking place between developed and less developed countries. The inability of less developed countries to compete financially, as well as technologically, with developed countries may be forcing the former to acquire terror weapons (TWP). The Iran–Iraq war in the 1980s and the events of 9/11 proved that the use of TWP is no longer a mere threat; there are several organizations and countries that will not hesitate to use them. This study develops a model of resource allocation in an arms race between a developed country that is characterized by state‐of‐the‐art technology and high GDP, and a less developed country whose technological capability and GDP are much lower. The model is used to predict the optimal mix of weapons of the two countries that are engaged in the arms race. Applying the model to the arms race between Israel and Syria demonstrates its use.     

Arming China: Major powers’ arms transfers to the People’s Republic of China

The rise of China has been fuelled by a massive military modernisation programme relying, in large part, on the acquisition of foreign military equipment. The question of how the world’s major powers define their arms transfer policies towards China is therefore crucially important. This article makes two original contributions. First, drawing on neoclassical realism, it proposes an explanatory framework integrating international and domestic factors to explain variations in major powers’ arms transfers. Second, based on a large body of elite interviews and diplomatic cables, it offers the first comprehensive comparison of American, British, French and Russian arms transfer policies towards China since the end of the Cold War.     

Feeding the Lion: China and defence development in African states

ABSTRACT

In analysing trends in Chinese defence engagement and their impact on defence development in African states, it is important to consider both China's changing policy priorities and its capabilities for the provision of defence support. China's international ambitions and its economic development contribute to its emergence as a key supporter of defence capability development in Africa, occupying a crucial niche as a provider of support, particularly arms transfers, appropriate to evolving local requirements. The economic and politico-military imperatives driving China's engagement of Africa, which stem from its economic reforms and re-emergence as a great power, are facilitating defence modernisation by accelerating the introduction of modern arms in substantial quantities. The commercial importance of arms exports and the growing importance of strategic ties strongly situate China to help sustain processes of defence capability development in African states over the long term.     

Walking a tightrope: the International Criminal Court and conflict prevention in Africa

Many African countries gained political independence in the 1960s. This era of independence came with promises and great expectations of economic, political and social development. Fifty years later, it is certain that the promises and expectations of independence have not been easily realised. Perennial violent conflicts have continued to ravage many countries in Africa, causing the catastrophic breakdown of law and order. Therefore, one of the major issues in conflict resolution discourse in Africa is how to develop functional mechanisms for the prevention of violent conflicts. This article examines the capacity of the International Criminal Court (ICC) to act as a mechanism for conflict prevention in Africa. Notwithstanding the doubts and uncertainties associated with the impact of law on conflict transformation, this article argues in the main that the ICC contributes to conflict prevention in Africa by expressing global norms of international law, challenging the culture of impunity in some countries, contributing to general deterrence, speedily intervening in some violent conflicts, and contributing to building some records of atrocities by identifying who did what.     

The French navy and the Algerian war

The French Navy's part in the Algerian War has been overlooked, but was vitally important. It took two main forms. The first, and primary, mission was to cut off the Algerian nationalists from outside support by a rigorous coastal blockade. Maritime surveillance in the Mediterranean and along the Algerian littoral achieved this. Inshore patrol vessels, supported by larger warships, sealed the routes by which the nationalists sought to infiltrate weapons and newly-trained guerrilla fighters from camps and arms dumps in Tunisia and Morocco. The French Navy intercepted cargo ships that sailed from East Bloc ports, attempting to smuggle arms into the Algerian nationalists. The most celebrated successes were the seizures of the Athos, Slovenija and Lidice in 1958–59. The Navy's second mission involved the deployment ashore, from April 1956, of the marine infantry (the demibrigade of Fusiliers-Marins). These units participated in the sweeps by French army units and engaged insurgent bands. They also garrisoned and protected installations, port facilities and transport networks in Algeria's coastal hinterland.     

EDITOR'S NOTE

This article offers a survey of risks that might arise for strategic stability (defined as a situation with a low probability of major-power war) with the reduction of US and Russian nuclear arsenals to “low numbers” (defined as 1,000 or fewer nuclear weapons on each side). These risks might include US anti-cities targeting strategies that are harmful to the credibility of extended deterrence; renewed European anxiety about a US-Russian condominium; greater vulnerability to Russian noncompliance with agreed obligations; incentives to adopt destabilizing “launch-on-warning” strategies; a potential stimulus to nuclear proliferation; perceptions of a US disengagement from extended deterrence; increased likelihood of non-nuclear arms competitions and conflicts; and controversial pressures on the UK and French nuclear forces. Observers in North Atlantic Treaty Organization (NATO) states who consider such risks significant have cited four possible measures that might help to contain them: sustained basing of US nonstrategic nuclear weapons in Europe; maintaining a balanced US strategic nuclear force posture; high-readiness means to reconstitute US nuclear forces; and enhanced US and allied non-nuclear military capabilities. These concrete measures might complement the consultations with the NATO allies that the United States would in all likelihood seek with respect to such important adjustments in its deterrence and defense posture.     

ASSESSING RUSSIAN ATTITUDES TOWARD PHASED,DEEP NUCLEAR REDUCTIONS

As the United States and Russia contemplate the next stage of nuclear arms reductions beyond the 2010 New Strategic Arms Reduction Treaty, another issue enters the agenda—that of the impact of possible deep reductions on the shape of the global nuclear balance. As the gap between the US/Russian arsenals and the arsenals of “second-tier” nuclear weapon states narrows, the familiar shape of the global balance, which remains, to a large extent, bipolar, is likely to change. The article explores the Russian approach to the relationship between further US-Russian reductions and the prospect of “nuclear multipolarity,” and assesses the relative weight of this issue in Russian arms control policy as well as the views on the two specific regional balances—the one in Europe (including UK and French nuclear weapons) and in Asia (the possible dynamic of the Russian-Chinese nuclear balance).     

Export controls,market structure and international coordination

We look at the different ways of aggregating the exports of dual use products to give the security perception of exporter countries and their consistency with the relevant export control regimes. Also, we analyze different models of export controls highlighting the role of the perception of security, market structure and competition between exporting firms in determining the existence of multiple equilibria and therefore, the need for coordination between countries in setting export controls.