THE DEFENCE SPENDING–EXTERNAL DEBT NEXUS IN ETHIOPIA

The aim of this paper is to examine the impact of defence spending and income on the evolution of Ethiopia’s external debt over the period 1970–2005. Using the bounds test approach to cointegration and Granger causality tests, we find a long run and a causal relationship between external debt, defence spending and income. Defence spending had a positive and a significant impact on the stock of external debt while income had a negative and a statistically significant impact on external debt. Our findings suggest that an increase in defence spending contributes to the accumulation of Ethiopia’s external debt, while an increase in economic growth helps Ethiopia to reduce its external debt.     

Defence Spending and Income Inequality in Taiwan

The rising trend in income inequality has recently attracted a renewed interest in the determinants of this growing trend across many countries. This article adds to the debate by investigating the impact of defence expenditure as a possible determinant of inequality in Taiwan, a country once was considered to be a poster child of an equitable growth, but now income inequality has become one of the Taiwan’s growing challenges. Applying the bounds test approach to cointegration and four long-run estimators for the period from 1976–2011, we found a long-run relationship between the various measures of inequality and defence expenditure where defence expenditure exerts a positive and a statistically significant impact on the worse income inequality in Taiwan. Further application of the lag-augmented causality test procedure also reveals a unidirectional causality running from defence expenditure to income inequality with defence expenditure causing income inequality to rise.     

Military expenditure and economic development in China: an empirical inquiry

Increases in military spending have a big impact on the socioeconomic conditions in any country. However, there is no consensus as to whether the rising military expenditure is beneficial or detrimental to economic growth. The present study chose China as a case study to empirically examine a complex relationship between military expenditure and economic development. The findings from the Johansen cointegration test indicated that there existed a long-run relationship between China’s military spending and economic growth. Furthermore, the Granger causality test detected a unidirectional causality from economic development to military expenditure. These results were further confirmed by the findings from the impulse response function. This means that China represents an example of a developing economy where the size of military expenditure expands in the process of economic transformation.     

The interrelationship between defence spending,public expenditures and economic growth: evidence from China

This study examines the relationship between defence spending, other components of public spending and economic growth for the 1952–2012 period in China using Granger causality tests and generalised impulse response functions based on vector error correction models. The empirical results reveal two long-run equilibrium relationships among the variables and also show that defence spending inversely and unidirectionally Granger impacts economic growth. Furthermore, empirical findings point to a trade-off relationship between defence spending and public expenditures in China. From a policy maker’s perspective, the findings reported herein imply that a decrease in defence spending may stimulate economic growth.     

Does defence expenditure have a spillover effect on income inequality? A cross-regional analysis in China

China’s defence expenditure has been growing rapidly along with GDP growth during the past two decades. Meanwhile, the income gap has continued to increase. There are conflicting views regarding whether the defence expenditure is capable of reducing income inequality. Therefore, this paper investigates the existence of any spillover effect of defence expenditure on income inequality, with a special focus on the regional differences among 31 provinces and 7 military regions in China. We extend panel cointegration and the impulse response function by using panel data during the period of 1997–2012. The empirical results show that the defence expenditure has an impact on income inequality, and the effect varies over different regions in China. The defence expenditure has a spillover effect on income inequality in the full sample panel and the southeastern panel. An increase in the defence expenditure does not crowd out social welfare spending due to the high level of economic development and government expenditure. On the contrary, in the northern panel, the effect is opposite because of the unbalanced economic development levels within the panel. Beijing as the capital of China, benefits more from the expansion of defence expenditure thus widening the income gap. In addition, the impulse response analyses further confirm a stronger effect of the defence expenditure on income inequality in the northern and the southeastern panels over a short period.     

The long shadow of colonial cartography: Britain and the Sino-Indian war of 1962

ABSTRACT

This article examines British responses to the Sino-Indian border war of 1962. It illustrates how, in the years leading up to the war, Britain’s colonial legacy in the Indian subcontinent saw it drawn reluctantly into a territorial dispute between Asia’s two largest and most powerful nations. It analyses disagreements in Whitehall between the Foreign Office and Commonwealth Relations Office over the relative strength of India and China’s border claims, and assesses how these debates reshaped British regional policy. It argues that the border war was instrumental in transforming Britain’s post-colonial relationship with South Asia. Continuing to filter relations with India through an imperial prism proved unsatisfactory, what followed was a more pragmatic Indo-British association.     

Acrimony,asymmetry, and the Sino-Indian nuclear relationship

ABSTRACT

While most contemporary analyses of South Asian nuclear dynamics acknowledge the presence of a strategic triangle between the region’s three nuclear players, the primary focus usually remains on the rivalry between India and Pakistan. Discussions of Sino-Indian relations remain limited. This is likely attributed to the stability in the two countries’ relations, yet it is worth asking why this stability exists and whether it is likely to continue in the future. Although China and India have an acrimonious relationship, their asymmetric nuclear capabilities and threat perceptions mitigate the danger of a traditional security dilemma. India may perceive China’s nuclear aggrandizement to be a security threat, but the same is not true of China, which has a vastly superior nuclear force and is largely shaping its nuclear-force structure in response to the threat it perceives from the United States. This dynamic makes a serious conventional or nuclear conflict highly unlikely.     

Strength in Numbers: The Labour Government and the Size of the Polaris Force

Previous historical accounts have simplified the Labour government's decision to commission a four-boat strategic nuclear deterrent, or ‘Polaris force’, in early 1965. Utilising previously classified sources, this article shows that a number of key strategic concerns led the decision-making process. Nevertheless, broader economic and diplomatic considerations were also important in determining the size of the Polaris force. A tremendous balance of payments deficit and ongoing debates regarding levels of conventional and nuclear involvement in NATO certainly influenced the government's final decision. Moreover, competing strategic and economic interests resulted in continued debate throughout the decision-making process.     

Expanding the Dragon’s Reach:The Rise of China’s Anti-access Naval Doctrine and Forces

Among the multiple dimensions of the tous azimuths modernisation of Chinese naval forces, the development of China’s anti-access capacity has recently elicited considerable interest. The important link between this capacity and an overarching vision of the use of force – i.e. a naval doctrine – has, however, often been left implicit. This article shows that the particular development of China’s naval anti-access forces – more precisely, forces with an impact on the naval balance – can be explained by a shift of China’s naval doctrine towards a distinctly pre-emptive posture, which, itself, stems from the set of constraints imposed by the framework of ‘local war under informationised conditions’.     

China’s Search for a ‘Strategic Air Force’

Once dismissed by many outside observers, the Chinese People’s Liberation Army Air Force (PLAAF) has undergone an impressive transformation over the past two decades, emerging as one of the world’s premier air forces. As it continues to modernize, it is focused on becoming a ‘strategic air force.’ PLAAF strategists suggest this means it should play a decisive role in protecting Chinese national interests, field modern capabilities commensurate with China’s standing as a major power, and enjoy the institutional status befitting its role as a ‘strategic service,’ an important consideration given the historical dominance of the ground force in China’s military.     

Military expenditure and income distribution in South Korea

This paper attempts to investigate the long-run and the causal relationship between military expenditure and income distribution in South Korea for the period 1965–2011. Applying the bounds test approach to cointegration, we found a long-run relationship between military expenditure and the Gini coefficient with military expenditure having a positive and a statistically significant impact on income inequality. A 1% rise in military expenditure increased the Gini coefficient by 0.38%. Application of the lag-augmented causality test also reveals a unidirectional causality running from military expenditure to income inequality. The evidence seems to suggest that devoting more resources to the military sector may further worsen income inequality in South Korea.     

Indian and Chinese espionage

India and China both have powerful spy networks; completely different in their approaches to espionage; both effective against their perceived enemies. China focuses first on internal threats, on Taiwan and Hong Kong, and then the US and Japan. India’s defense policy focuses on Pakistan and internal terrorist threats, and then on China. In reality, however, when it comes to spying on each other, both China and India suffer from incompetence and apathy – which endangers both their own security and regional stability. This article looks at how they spy on each other, and asks why and how they need to improve. The narrative also touches upon some of the individuals who are waging the spy war, from India’s wily spymaster Ajit Doval down to junior Chinese agents such as Wang Qing and Pema Tsering. The two countries are not friends. They have the largest territorial dispute in the world on their hands, covering an area the size of North Korea, and they have large armies facing each other along 4000 kilometers of frontier. But they also lay claim to the world’s two oldest and richest civilizations, with a rich history of exchange, and now with a combined population of 2.6 billion people and more than a quarter of the world’s economic output. If they cooperated, they could solve many of the world’s problems; but if they lurch into conflict, the potential consequences are terrifying to contemplate. Unfortunately, despite their geographical closeness, they do not know much about each other. They have few cultural interchanges, little diplomacy, few trade missions. They do not watch each other’s films, read each other’s books or listen to each other’s music. Chinese tourists would rather fly to New Zealand for their holidays than cross the border to India, and Indian students would rather study in Europe than China. China and India are neighbors that barely talk to each other. Most significantly, they do not spy on each competently. For countries that do not interact socially, defensive understanding is important for security – but China prefers the glamor of facing up to its Pacific and other maritime rivals such as the US and Japan. India, for its part, does talk a great deal about the China threat, but its resources and expertise are wrapped up in controlling its security threat from Pakistan and the Islamic world. When China and India do try to spy on each other, it is often without the benefit of a long-term focus or understanding. India has some very skilled operatives within the Research and Analysis Wing, but few that specialize in China. China has an enormous pool of resources spread across several government departments, including the Ministry of Public Security, and also has extensive facilities and manpower in the Joint Staff Department of the Central Military Commission (the JSD) and the new Strategic Support Force (the SSF). However, China’s intelligence services generally behave as if India is not worth spying on. Given that the two countries do not have the cultural or political machinery in place to understand each other, espionage and intelligence gathering is vital to ensure that miscalculations do not take place. This has been apparent over the last few years in stand-offs in the Himalaya, as well as top-level suspicions on each side about a variety of subjects including terrorism, covert operations in Sri Lanka and Burma, and the two countries’ nuclear weapons programs. Both countries do occasionally make efforts in espionage against each other, especially during sensitive periods such as the mountain stand-offs of 2014 and 2013 and during policy developments in nuclear warfare. In this article the author looks at actual spying incidents between the two countries, their methodologies, their staff, their technical capabilities, and how the act of spying, which is usually viewed as intrinsically adversarial, can be a force for good. The article relies on interviews with actual participants in intelligence from both countries as well as extensive use of contemporary online sources, and secondary analysis by both military and academic experts from China, India and NATO countries.     

The Crowe Memorandum,the Rebalance to Asia,and Sino-US Relations

Many contemporary academics and policy analysts have revisited the Anglo-German rivalry before 1914 to predict what may await China and the United States in the twenty-first century. However, few, if indeed any, have specified in what sense this comparison can be made. This paper attempts to fill this gap with a detailed analysis of the strategic parallels between the Anglo-German rivalry then and the China–US competition now through the lens of the Crowe Memorandum. The author argues that the basic parallel between the rise of Germany and the rise of China lies in the challenges they posed or pose to the dominant maritime power and system leader – Great Britain then and the United States today. This parallel also explains the similarity between the Triple Entente initiated by Great Britain prior to 1914 and the Rebalance to Asia launched by the United States in 2011. Furthermore, as in the case of the Anglo-German rivalry before 1914, the most crucial problem underlying the mounting China–US competition in recent years has been America’s deepening apprehension about the development of China’s anti-access/area-denial (A2/AD) and naval capabilities. This development, from the US perspective, is threatening to deprive the US of its most crucial instrument to influence the strategic equilibrium on the East Asian littorals. Based on the lessons of the Anglo-German rivalry prior to 1914, the essay also examines the potential for mitigating, if not eliminating, the mounting competition and misgivings between China and the United States.     

The Dao of foreign policy: Understanding China’s dual strategy in the South China Sea

In the South China Sea, China neither implements power-maximizing policy nor engages a peaceful approach. Instead, China implements both coercion and cooperation in pursuing its strategic interest in the disputed area. How can we explain China’s paradoxical behavior? This article claims that the best way to explain China’s policy in the South China Sea is to understand the character of dualism in China’s strategic culture. Following constructivist theory that stresses culture, this article argues that Chinese duality approach in the South China Sea is rooted in the philosophy of Daoism. The symbol of Yin-Yang depicts Chinese assertive as well as cooperative behavior in dealing with the South China Sea dispute. Although from a normative perspective Daoism recognizes pacifism and non-violent behavior, the most important feature of Daoism is the assumption that reality consists of two opposing elements that are mutually embedded.     

‘A Brave New World for Chinese Joint Operations’

A key organizational challenge for all modern militaries is instituting an effective command-and-control (C2) structure for joint operations. China has been a relative latecomer to joint operations, with a persistent weakness in joint C2. Reforms launched in early 2016 sought to overcome this challenge by establishing a permanent two-level joint C2 structure. Although not a ‘tipping point’ that will lead ineluctably to stronger operational effectiveness, this reform is nonetheless an important milestone in an evolutionary process towards better PLA joint operations. The result could be added operational challenges for several of China’s neighbors and the United States.     

It Takes Two to Tango: Autocratic underbalancing,regime legitimacy and China’s responses to India’s rise

What factors do autocracies evaluate when responding to perceived threats and why might they fail to balance appropriately? I posit that autocratic leaders may choose greater exposure to an external threat if, by doing so, it preserves regime legitimacy. Specifically, the desire to promote a positive image to one’s domestic public creates incentives to publicly downplay a rival’s military progress, which then affects the state’s ability to mobilize resources to respond to the growing threat. I test this theory in the case of China’s response to India’s military rise. This research contributes to balancing theory and empirical work on East Asian security.     

MACROECONOMIC ASPECTS OF INTERNAL CONFLICTS: A CONCEPTUALISATION

This exploratory paper outlines the special macroeconomic features of countries populated by two groups of people engaged in internal conflict yet forming a central government for generating benefits that cannot be privately attained. Each group exerts an influence on the central government in accordance with its relative military strength. The central government collects taxes, exports the country’s natural resources and tourist attractions, attracts external grants and loans, and distributes the net revenues between the rival groups. The paper highlights the implications of the groups’ investment in military strength for the state’s net revenues and their distribution, for the state’s external debt, and for the groups’ ability to maintain and increase their ranks, production capital and per capita income.     

CHINA AND THE U.S. BEYOND THE KOREAN PENINSULA

China-U.S. cooperation over the most difficult security problem in Northeast Asia—the North Korean nuclear issue—in essence projects its bigger power game amid the tectonic shifts of Asian geopolitics. The nuclear issue affords a test case to gauge the future posture of China and the United States in East Asia and their partnership in that conflict-prone region. Approaches to resolving this issue must take into account the geopolitical realignment of Asia, Washington's reorientation of relations with its Asian allies, and China's rise as an influential regional player and the subsequent regional response. However, the long-standing mistrust between China and the United States is contributing to a lack of substantial progress in Korean nonproliferation efforts. The declared nuclear test by Pyongyang further put the denuclearization cooperation between China and the Unites States on the line. China-U.S. cooperation in denuclearizing Pyongyang may either produce lasting stability for the region or create ‘‘collateral damage,’’ with the North Korean issue paling in comparison.     

Japan and Extended Nuclear Deterrence: Security and Non-proliferation

ABSTRACT

To an observer, Japan’s approach to nuclear weapons can appear confused and contradictory. The only country to have been attacked with nuclear weapons is variously described as a pacifist and non-nuclear nation and as a proliferation threat. These widely varied and conflicting conclusions are understandable given that conflicting messages are sent by senior figures. However Japan’s stance is in fact a coherent, if not uncomplicated, response both to its security needs and to domestic public opinion. However, the security provided by US extended nuclear deterrence underlines and enables this approach. The key policies and decisions were taken in both Washington and Tokyo between China’s first nuclear test (1964) and Japan’s ratification of the Nuclear Non-Proliferation Treaty (1976). How the United States came to offer this additional security guarantee to Japan and how Japan came to rely upon it underscore this complex stance and are crucial to understanding a longstanding and ongoing security arrangement and source of stability and security in northeast Asia.     

International Security,Multiple Public Good Provisions,and The Exploitation Hypothesis

Since the 1960s Olson-Zeckhauser’s (1966) analysis, its ‘exploitation of the great by the small’ has provided economists’ core model of alliance’s provision of security/defense. But with the end of the Cold War, countries’ allocative behavior has diverged markedly from OZ’s predictions for defense as a homogeneous pure public good voluntarily provided. This paper suggests a replacement for OZ, with the essential difference that ‘defense’ rather than being aggregated into their single public good is disaggregated into more realistic categories of self-insurance and self-protection. Because allocative behavior in public good groups is essentially driven by income effects, we concentrate on these, which become complex and conflicted, giving much greater scope for goods-inferiority. The analysis is followed by numerical simulations, which conform to actual experienced allocations in NATO much better than the conventional ‘exploitation’ model.