ACHIEVING NUCLEAR BALANCE

One of the most important questions affecting U.S. national security is the future size of the U.S. nuclear stockpile. While there is clear consensus within the U.S. government on the need to reduce the size of the arsenal, there is none on the best path to achieve these cuts; on the type of deterrent necessary to deal with future threats; or on the size of the production complex needed to support that arsenal. Creating a strategic commission to review these questions, as contemplated in the Fiscal 2008 House Defense Authorization bill, is a necessary first step to establish a sensible nuclear policy. The Reliable Replacement Warhead, which has the potential to transform the complex while preserving the current moratorium on nuclear testing, is a program worth exploring further if it stays within congressionally mandated bounds. As Congress considers both programmatic and policy matters related to U.S. nuclear weapons, it is vital that we also renew and strengthen U.S. leadership on nuclear nonproliferation.     

Transnational terrorism as a spillover of domestic disputes in other countries

This paper models transnational terrorism as a three‐way strategic interaction involving a government that faces armed opposition at home, which may spill over in the form of acts of terrorism by the state's opponents against the government's external sponsor. The external sponsor also utilises deterrence against potential terrorists, which only lowers terrorism if terrorists are not intrinsically motivated by a deep‐seated sense of humiliation. The model highlights the importance of intrinsic motivation. A rise in the external power's preference for deterrence against terrorism may backfire in these circumstances. Increases in the government's military efficiency against the rebels, who are also terrorists against the government's sponsor, raises overall levels of violence.     

Military spending and economic growth in South Africa

This paper undertakes an empirical analysis of the economic effects of military spending on the South African economy. It estimates a neo‐classical model common in the literature at the level of the macroeconomy and at the level of the manufacturing sector. An attempt is made to improve upon the model by allowing the data to determine the dynamic structure of the model through an ARDL procedure. No significant impact of military spending is found in aggregate, but there is a significant negative impact for the manufacturing sector. This suggests that the cuts in domestic military procurement that have occurred since 1989 could lead to improved economic performance in South Africa through their impact on the manufacturing sector.     

The impact of arms production on the South African manufacturing industry

The 1977 UN arms embargo was one of the main factors which led South Africa to establish a largely self sufficient import‐substituting arms industry capable of meeting the apartheid state's demand for sophisticated weaponry. While macroeconomic studies suggest that high military spending had a damaging effect on economic growth, no studies have investigated the disaggregated impact of military expenditure on industrial development. This paper applies panel data methods to the Industrial Development Corporation's Sectoral Database in order to analyse the level effects of military spending.     

Measuring defense conversion in Russian industry

This paper develops and implements a methodology for quantifying defense conversion in Russian manufacturing in the early 1990s. A two‐sector, three‐good model is employed to analyze the flows of resources from military to non‐military uses and applied to firm‐level survey data under alternative definitions of military production and the MIC. An aggregation framework is constructed to estimate the total quantity and change in Russian military production, the latter decomposed into intrafirm and intersectoral resource reallocation and overall industrial decline. Although there is evidence of substantial decline in military production, the data show little reallocation to productive civilian uses, neither within the MIC nor to other manufacturing sectors.