COUNTRY SURVEY XX: DEFENCE SPENDING AND PEACEKEEPING IN URUGUAY

Uruguay is a country with a very unusual profile, since it has just 3.4 million inhabitants but is among the top ten troop contributors to the UN PKO (Peace Keeping Operations) and is the first contributor per capita. In 2002 and 2003 it was the seventh troop contributor to the UN, and by the end of 2005 it was eighth in the UN ranking. Uruguay has never had any imminent external threat to its security after its independence in 1828, and it has had no internal threat since the end of the urban guerrillas’ actions in the 1970s. The country has no defence industry, and has always had an all‐volunteer military service, which presently involves almost 1% of the total population, and about 2% of the labour force. The empirical evidence presented in this paper shows that, in the past decades, Uruguayan defence spending has been influenced mainly by internal factors, most of them of an economic nature. The high participation in PKO has not increased military expenditure and it has produced a positive impact on the country’s economy.     

THE LONG‐RUN RELATIONSHIP BETWEEN DEFENCE EXPENDITURES AND GDP IN TAIWAN

Using the Solow–Swan growth model and the time‐trend included in the aggregate production function, this study applies the multivariate cointegration approach to re‐investigate the long‐run and causal relationships between defence expenditures and GDP while controlling for capital and labour input in Taiwan during the 1955–2002 period. It examines the long‐run causal relationship using the weak exogeneity test and utilizes general impulse response functions to determine whether a shock to defence expenditures affects economic growth or vice versa. Our findings provide substantive evidence in favour of the existence of a long‐run equilibrium cointegrated relationship between defence expenditures, GDP, labour and capital stock. The results of the weak exogeneity test indicate that a bi‐directional causal relationship exists in the long‐run between defence expenditures and GDP. Thus, the main policy implication that emerges from the long‐run results is that increasing defence expenditures in Taiwan is an effective means to boost overall economic performance and, with this improved economy, it should then be able to increase its defence expenditures further. Lastly, from our dynamic vector error correction model estimations, it is found that defence expenditures are a major means of adjusting for disequilibria that occur within the system.     

EFFECTS OF MILITARY SPENDING ON THE PROFITABILITY OF SPANISH DEFENCE CONTRACTORS

The traditional view of the defence industry obtaining large profits from contracts with the Ministry of Defence relies on several assumptions. Among these are the use of such arrangements as an instrument of industrial policy, the strong market power enjoyed by prime contractors, and the inefficiency encouraged by the sector. The findings show that defence contracts have a positive effect on profits, as well as the prizes for innovation and the market power enjoyed by some defence subsectors.     

A PRODUCTIVITY AND EFFICIENCY ANALYSIS OF THE SECURITY AND DEFENCE TECHNOLOGICAL AND INDUSTRIAL BASE IN SPAIN

This study analyses the performance of the productivity of the main industrial subsectors composing the security and defence technological and industrial base (SDTIB) in Spain from 1996 to 2009. Accordingly, we have used the non-parametric data envelopment analysis and bootstrapping techniques to compute Malmquist productivity indexes that allow us to split productivity growth into efficiency change and technical progress. The results obtained show productivity improvement in the SDTIB as a whole due mainly to advances in technology and to a lesser extent to the contribution of technical efficiency. The bootstrap approach yields further evidence, as for many cases, productivity growth or decline, is not statistically significant. This is the first time a study of this kind has been carried out on the production process of this sector in Spain.     

ACCRUAL BUDGETING AND DEFENCE FUNDING: THEORY AND SIMULATIONS

This paper explores the impact of moving to accrual budgeting on resources allocation in defence. Standard defence budgeting and investment models are used to assess the theoretical implications of accrual budgeting. In addition, a number of simulations are conducted to assess the long-term implications of moving to accrual accounting and budgeting. The result of the simulations shows that changes to deployed operations and other operational shocks will have manageable impacts on readiness but systematic shocks associated with defence unit prices, procurement policies and defence specific inflation will put considerable strain on the defence department's flexibility.     

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.     

Guns for Butter? Empirical Evidence from China

Abstract

This study examines the causal nexus between defence spending and education expenditure in China using the bootstrap Granger full-sample causality test and sub-sample rolling window estimation. The full-sample result indicates that there is no causality between defence spending and education expenditure. By adopting a time-varying rolling window approach to revisit the dynamic causal relationships, this article identifies a negative unidirectional causality running from education expenditure to defence spending. The finding suggests that it is the education expenditure crowds out defence spending in China rather than reverse. No causality is demonstrated from defence spending to education expenditure, indicating that an increase in military spending will not crowd out expenditure on education. The results could be partly explained by that the education expenditure in China is below the requirement of corresponding economic growth, urging for more financial budget. Whereas the findings support a negative trade-off between defence and education expenditures, they refute the theory of ‘guns for butter’.     

单兵系统战场信息库及信息管理——“数字化战场与单兵数字化系统”系列论文之四

本文在讨论单兵系统战场信息分类与信息库系统结构的基础上，提出了单兵战场信息库系统的功能与设计原则。然后，对单兵战场信息库系统中的信息处理流程进行了分析。