Country survey X: Defence spending in Turkey

This paper provides a country survey of the Turkish defence economy. Turkey is a member of NATO alliance and is strategically located between Europe and Middle East. Moreover, Turkey has a high defence burden and high economic growth. The first part of the survey presents a brief economic background of Turkey, its armed forces, the defence industry, its modernisation and trends in Turkish defence expenditure. The rest of the paper focuses on the relationships between defence spending and economic growth. The effect of defence spending on economic growth is econometrically estimated using a supply side model. Both externality effects and the size effect of defence spending are estimated for Turkey. The study concludes that defence expenditure stimulates economic growth while externalities from the defence sector to the rest of economy are negative for Turkey.     

The Demand for Turkish Defence Expenditure

Although a number of studies concerning Turkish defence-growth relation have been published in recent years, little attention is given the demand for Turkish defence expenditure. This is an important issue for understanding which variables contribute to the determination of the demand for military expenditure. However, it is difficult to develop a general theory or a standard empirical approach for the determination of the demand military expenditure. This study models and estimates the demand for Turkish defence expenditure for the period 1951-1998 using autoregressive distributed lag approach to cointegration (ARDL) following the methodology outlined in Pesaran and Shin (1999). This procedure can be applied regardless of the stationary properties of the variables in the sample and allows for inferences on long-run estimates, which is not possible under alternative cointegration procedures. The findings suggest that Turkish defence spending is determined by NATO's defence spending, Greece's defence spending and some security considerations.     

Book review

The politics and economics of defence industries: E. Inbar and B. Zilberfarb (eds), Frank Cass Publishers, London and Portland, Oregon, 1998, pp. xviii+225.

Russia and the Arms Trade: Ian Anthony (ed.), Oxford University Press, SIPRI, 1998, pp. xiv+304.     

TERRORISM: FACTS FROM FIGURES 1

If international terrorism is on a rising trend, an important source of confirmation or refutation of this is time‐series data on terrorist activity. Using chiefly data collected by the RAND/MIPT consortium we show using basic statistical analysis that in the period 1968–2005 the yearly number of all international terrorist incidents shows no trend over time, but fluctuates year on year in a random manner. On the other hand some indicators do show a definite trend over time, principally the steady rise in the number of incidents that are death‐dealing in nature. A further conclusion is drawn, showing that the proportion of these incidents leading to deaths above a given level is virtually fixed.     

A note on defence spending in turkey: New findings

The relationship between defence spending and economic growth has been examined extensively in recent years using the Feder (1983) model. These studies suffer from poor statistical results. In this paper, the earlier findings of Sezgin (1997), which used the Feder model are re‐estimated. Firstly, the stationarity of variables is tested. Due to the non‐stationarity of some variables, regressions are performed using first differences of variables. Secondly, lags are introduced into the Feder model. The statistical results are highly improved. Not only is a strong positive association between defence spending and economic growth found for Turkey, but also human capital is positively correlated to Turkish economic growth with a lag.     

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.     

Dynamic Winner-Take-All Conflict

This paper empirically investigates the importance of financial and political variables in determining debt rescheduling probabilities in Turkey for 1955–2000. The problem of sovereign debt default and rescheduling has been the subject of substantial academic research during the last two decades. There has been criticism of models of developing countries’ indebtedness and rescheduling that rely solely on some economic or financial predictors related to country debt, the foreign exchange sector or the domestic economic situation. Using probit analysis, this paper indicates that financial variables are important determinants of rescheduling probabilities. However, political variables are not significant in our models.     

Introduction: Symposium on defence economics

This study revisits the relationship between defence spending and economic growth via a Keynesian model in Pakistan using the autoregressive distributive lag bounds testing approach to cointegration. Empirical evidence suggests a stable cointegration relationship between defence spending and economic growth. An increase in defence spending reduces the pace of economic growth confirming the validity of Keynesian hypothesis in this case. Current economic growth is positively linked with economic growth of previous periods while a rise in non-military expenditures boosts economic growth. Interest rate is inversely associated with economic growth. Finally, unidirectional causality running from military spending to economic growth is found.     

Reward,punishment or inducement? US economic and military aid, 1946–1996

If the US has wielded power as global hegemon, then there should be evidence of a linkage between American resources and the ability to influence behavior. However, there is widespread disagreement on how this power is manifested (see Krause, ). Methodological and epistemological issues have hampered empirical studies of US hegemonic behavior. For example, does the US reward past behavior or does it offer inducements for future behavior? We document and discuss these issues in terms of the aid–foreign policy compliance nexus. The empirical portion of our paper tests whether US military and non‐military aid are correlated with foreign policy similarity. The main merits of our study are that: (1) we test a new measure of foreign policy similarity developed by Signorino and Ritter () and compiled by Gartzke et al. (); (2) we relax the causality issue and test using vector autoregression (VAR) for 76 developing countries; and (3) our time horizon is a minimum of 30 years for each country. Our central finding is that aid is most often used as a reward. More specifically, foreign policy similarity leads to greater economic aid for most African countries, foreign policy similarity leads to greater military aid for a majority of Latin American states, and there are no overarching patterns for Asia and the Middle East. We discuss the implications of our findings in the context of the bargaining and structural approaches to statecraft.