The military recruiting productivity slowdown: The roles of resources,opportunity cost and the tastes of youth*

After a decade of successful recruiting, the US military began experiencing recruiting difficulties in the 1990s. Cyclical factors as well as trend factors may have played a role. This paper uses monthly data by state over the period 1989-1997 to estimate models of enlistment and evaluate the various explanations for the recruiting slowdown. Estimates of the impact of economic variables - relative military pay and unemployment - and recruiting resource variables - recruiters and advertising - are similar to those in previous studies. Two trend factors, rising college attendance and declining adult veteran population (influencers), are found to be important factors explaining the decline in enlistment.     

On the production of victory: Empirical determinants of battlefield success in modern war

Using a data set of historical battles from 1600 to 1973, this paper analyzes the empirical determinants of tactical success in modern war. Based on a reduced form approach we consider key elements of military theory as production factors for combat success as an output of a military production function. The paper focuses on the relationship of material and non-material factors to battlefield success, and especially on the role of superior force strengths. Contrary to the emphasis on technology which can be found in the recent literature, our estimation results indicate that numerical superiority has retained its crucial role for battlefield performance throughout history. In general, human elements of warfare, like leadership, morale and surprise, have continued to be important determinants of battle outcome despite technological progress in weapons.     

How old is too old? An economic approach to replacing military aircraft

The US Air Force is asking when to replace its aging aircraft. We develop a framework to identify economically optimal replacement strategies that recognizes cost trade-offs and incorporates age effects. We also preview a stochastic methodology. We use the framework to identify an optimal strategy, defined by the replacement age, for a generic fleet and conduct a sensitivity analysis. Quantitative illustrations show that the range of strategies that provides close-to-optimal outcomes widens as the operating and support (O&S) cost growth rate decreases and the ratio of the acquisition price to the initial O&S cost increases. A wider range implies more decision-making leeway.     

The German arms industry in a European context: A study in successful downsizing

Defence offsets rank as one of the most important and controversial topics within the broad field of defence economics. Arms vendors are likely to view offsetting investment as a distraction, fearful of its potential to hurt the bottom line. By contrast, policymakers in the arms purchasing countries see offsets as an opportunity to extract technology transfer, as well as employment, investment and export sales opportunities. Establishing the actual impact of offsets, however, is not easy. The subject is shrouded in secrecy and myth, with anecdote and generalisation pervading even the intellectual press. This paper seeks to break the mould by offering an empirical case study of the role of offsets in Malaysian defence industrialisation.     

External security determinants of Greek military expenditure: An empirical investigation using Neural networks

Greece has regularly ranked as the country with the highest defence burden in NATO and the European Union. Over the past decades she has allocated an averatge 6% of GDP to defence yearly. This study using neural networks examines the external security determinants of Greek military expenditure in the context of the ongoing Greek‐Turkish conflict.     

Country survey V: Poland and its arms industry

This study — which is a country survey — deals with basic problems of the functioning of the Polish arms industry in the conditions of systemic transformation, that has taken place in Poland since 1989. It also reflects new political and military conditions and changes in the economic system, commonly called marketization. The study is focused on reasons for the bad economic state of the enterprises engaged in military production, which include a drastic drop in demand on home and foreign markets. The study discusses the main direction of activities that are planned to reshape and adjust military production to the new, changed conditions covering such problems as ownership and organization changes as well as prospects for conversion.     

MILITARY EXPENDITURE AND GRANGER CAUSALITY: A CRITICAL REVIEW

A large literature has used tests for Granger (1969) non‐causality, GNC, to examine the interaction of military spending with the economy. Such tests answer a specific although quite limited question: can one reject the null hypothesis that one variable does not help predict another? If one can reject, there is said to be Granger causality, GC. Although the limitations of GNC tests are well known, they are often not emphasised in the applied literature and so may be forgotten. This paper considers the econometric and methodological issues involved and illustrates them with data for the US and other countries. There are three main issues. First, the tests may not be informative about the substantive issue, the interaction of military expenditure and the economy, since Granger causality does not correspond to the usual notion of economic causality. To determine the relationship of the two notions of causality requires an identified structural model. Second, the tests are very sensitive to specification. GNC testing is usually done in the context of a vector autoregression, VAR, and the test results are sensitive to the variables and deterministic terms included in the VAR, lag length, sample or observation window used, treatment of integration and cointegration and level of significance. Statistical criteria may not be very informative about these choices. Third, since the parameters are not structural, the test results may not be stable over different time periods or different countries.     

Better is the Neighbor?

Abstract

This study applies the Sequential Panel Selection Method (SPSM), to investigate the convergence properties of the military expenditure of the North Atlantic Treaty Organization (NATO) during the period of 1990–2015. Compared to the traditional methods, SPSM considers fundamentally general spatial homogeneous and heterogeneous relationships with countries and examines the evolution of military expenditure. We find that four-fifths of NATO member countries have been convergent with the UK, but no country’s military expenditure is convergent with the US. This means that there is no significant linkage effect in the US for NATO military expenditure. While they are allies of the US, the majority of NATO member countries’ military expenditures are consistent with UK military expenditure. The main reasons are due to the geographical space layout and the international relationship convergence. The results indicate that more than four-fifths of NATO member countries have been coordinated with convergence theory and spillover effect.     

MILITARY EXPENDITURE AND ECONOMIC GROWTH IN DEVELOPING COUNTRIES: EVIDENCE FROM SYSTEM GMM ESTIMATES

The effect of military expenditure on economic growth in developing countries has been investigated by many empirical literatures. However, there is little consensus of that effect and the diversity seems to come from the use of different models and different estimators. This article applies the Augmented Solow Growth Model to examine the influence of military expenditure on economic growth for 35 developing countries over the period of 1975–2009. By using the system Generalized Method of Moments (GMM) estimators, empirical results indicate that defence has a negative and significant effect on economic growth in the sample countries.     

A DYNAMIC PANEL DATA MODEL FOR ANALYZING THE RELATIONSHIP BETWEEN MILITARY EXPENDITURE AND GOVERNMENT DEBT IN THE EU

This paper examines the impact of military spending on general government debt in the enlarged European Union (EU) countries. For this purpose, we use panel data analysis and provide estimates from a dynamic Generalized Method of Moments (GMM) panel model. The dynamics are found to be important and the results suggest that military expenditures do have a large positive impact on the share of general government debt in the EU.