Stopping Suicide Attacks: Optimal Strategies and Unintended Consequences

We study the behavior of defense spending in Switzerland over 1975–2001. Our main interest is in determining how neutrality in international affairs (non‐membership in military alliances) affects defense spending. We find that neutrality is associated with a perception of lower levels of external threat; hence it confers economic benefits in the form of a smaller defense burden. However, neutrality does not fully insulate a country from variations in the level of external threat in the global system as perceived by members of military alliances. Swiss defense spending has tracked very closely the spending trends – but at a lower average level – of the United States and other NATO countries. To the extent that post‐Cold War threats, such as international terrorism, materialize primarily in the context of existing security alliances, Swiss military spending patterns observed in 1975–2001 are likely to remain the same in the future.     

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.     

TAX EFFICIENCY AND QUALITY/QUANTITY TRADE‐OFFS IN DEFENSE PROCUREMENT*

In this article the effect of defense spending on aggregate output is discussed. Recent publications in this area are reviewed and new additional evidence is provided. The findings presented in this paper are supportive of the positive effect of defense spending. However, in light of the contrary evidence presented in other papers, empirical evidence taken as a whole, suggests that a definitive conclusion about the effect of defense spending at this time should be avoided.     

Defense spending and economic growth across the Taiwan straits: a threshold regression model

This paper employs both linear and non‐linear models to investigate the relationship between national defense spending and economic growth for Taiwan and China. Using data from 1953–2000 on defense spending, GDP, import, export and capital, we find that China's defense spending leads that of Taiwan. There exists the phenomenon of an arms race between both countries when official Chinese data are used. On the one hand, feedback relations prevail between economic growth and defense spending growth in Taiwan. On the other hand, China's national defense is found to lead economic growth.     

Preserving defense technologies: A strategy for economic conversion†

This paper presents a model for converting legacy defense production facilities into private‐sector economic resources. Specifically, this paper will examine as a case study the first successful conversion of a former U.S. Department of Energy nuclear weapons production installation, including reasons for its success, its costs and benefits, and lessons for public policy. It is envisioned that this model may be useful for mitigating local economic hardship resulting from defense “downsizing” and for privatizing production capacities critical for national defense.     

Public opinion: A powerful predictor of U.S. defense spending

Public opinion survey responses regarding the desirability of changes in defense spending can be compressed into a single variable, the public opinion balance, which, when accompanied by a control variable measuring the proportion of responses in the “residuum” (no opinion or keep the status quo), permits an accurate prediction of subsequent changes in the rate of change of U.S. defense outlays from the mid‐1960s through the 1980s. This finding cannot be interpreted as a simple case of “the public got what it wanted,” however, because public opinion was not autonomous or spontaneous, and defense decision makers themselves played a central role in shaping public opinion.     

A note on the financial condition of defense contractors

In recent years, there have been several changes in the weapon‐system acquisition market which have the potential to negatively impact the financial condition of defense contractors. This study evaluates the financial health of defense firms vis‐a‐vis nondefense firms using a fiscal distress identification model developed by E.I. Altman. We conclude that the financial condition of defense firms has deteriorated but the deterioration is the same as experienced by nondefense firms.     

Budgetary Trade-Offs Between Defense,Education and Health Expenditures: The Case of Turkey

The main objective of this paper is to evaluate empirically the existence of a budgetary trade-off between military, education and health expenditures in Turkey for the time period 1925-1998. Development economists, peace and defense economists and political economists have extensively investigated the existence of a trade-off between military, education and health spending since the 1970s. However, the literature review reveals that it is hard to establish a general theory of budgetary trade-off between military, education and health spending and make this applicable for all cases. This is mostly due to economic, social, political, and historical differences among the countries Moreover, it is likely that different research techniques, different time periods analyzed may produce different results. As a result of this, researchers have found a variety of outcomes regarding the trade-off between defense-education and health expenditures. This study presents a brief literature review within the framework of trade-offs between defense-education and health expenditures and also concentrates on theoretical model development. The discussion will center on developing a multi-variable single equation regression model and presenting estimable forms of equations.     

Military expenditure and economic growth: peru 1970–1996

The present study examines the effects of military expenditure on growth in Peru in the period from 1970 to 1996. By using a Deger‐type Simultaneous Equations Model it is possible to break up the net effect into supply‐ and demand‐side influences. The former consist of positive externalities of defence activities on the other sectors of the economy, while the latter can be described as crowding‐out of civilian investment. Estimations find the supply‐side effects to be insignificantly different from zero, while the crowding‐out effect of defence spending is significant and substantial. It is thereby established that defence expenditure has a negative overall effect on economic growth in Peru. Although several caveats – including specification problems of the Deger model, the quality of the data used, a relatively small sample and the presence of autocorrelation in the estimations – must be considered, these results turn out to be quite robust with respect to estimation methods (3SLS, 2SLS, OLS) and slight modifications to the model. They are also consistent with previous empirical findings from other countries and cross sectional studies.     

ON THE CHOICE OF MULTI-TASK R&D DEFENSE PROJECTS: A CASE STUDY OF The ISRAELI MISSILE DEFENSE SYSTEM

Investments in R&D constitute a major share of the expenditures of the hi-tech industry since, generally, they enable firms to successfully compete in the rapidly and constantly changing markets for hi-tech products and services. The role of R&D projects is particularly important in the areas of defense and homeland security due to the nature of warfare and the continuous threats posed by arms races and by terror organizations. This study analyzes the choice of the R&D projects designed to counter multiple related military threats. It develops the methodology required to assess whether it is preferable to develop one project to thwart several related threats, or several distinct projects, each of which provides an answer to one specific threat or a partial set of the threats. An analytic solution is provided and assessed for two simple models with two related threats. A solution of the model is then provided for any number of related threats, using a dynamic programming methodology. Finally, we demonstrate the usefulness of our model and methodology to Israel’s missile defense problem; that is, we show how to optimally develop systems aimed at thwarting the multiple threats of short-, medium-, and long-range missiles.