MILITARY SPENDING AND ECONOMIC GROWTH IN SOUTH ASIA: COMMENT AND RECONSIDERATION

In a recent paper in this journal, Wijewerra and Webb study the connection between military spending and gross domestic product (GDP) in a group of five South Asian countries, finding a small but statistically significant positive relationship between military spending and GDP. This paper reviews their approach and proposes an alternative which tries to deal with the problems of omitted variables and variable construction. It finds, in contrast, that a higher share of military spending in GDP is associated with lower growth of GDP per capita.     

The causal nexus between military spending and unemployment in the G7: a bootstrap panel causality test

We revisit the causal relationship between military spending and unemployment in the G7 countries applying a bootstrap panel causality analysis that accounts for both cross-sectional dependence and for heterogeneity across countries. Using per capita real GDP as a controlled variable, we found a unidirectional causality running from military spending to unemployment for Canada, Japan, and the US, one-way causality running from unemployment to military spending for France and Germany, and bidirectional causality for Italy and the UK. The empirical evidence does not seem to provide consistent results regarding the causal relationship between military spending and unemployment in G7 countries.     

Defense Burden and the Effect of Democracy: Evidence from a Spatial Panel Analysis

ABSTRACT

Do democracies spend less on national defense? This paper provides new evidence of the effect of democracy on defense burden based on a Spatial Durbin Model with panel data for 98 countries for the years 1992–2008. While democracy measured by means of an index variable covering the entire range from perfect democracy to perfect autocracy turns out to be insignificant, dummy variables indicating transition to higher levels of democracy reveal a statistically highly significant negative effect of democracy on a country’s defense burden. Allowing for country-specific effects reveals heterogeneity in the effect of democracy across countries. Apart from the effect of democracy, the estimation results indicate strong spatial dependence of military burdens across countries. Moreover, they provide statistical evidence for a peace dividend, for substitution effects in defense spending and for a negative effect on the military burden for countries when they exhibit a trade surplus instead of a trade deficit.     

Sovereign debt,deficits and defence spending: the case of Greece

Abstract

The outbreak of the sovereign debt crisis at the end of 2009 in Greece led to a severe recession, and constant economic problems. This paper investigates military expenditure among others as a potential factor to the growth of sovereign debt in Greece over the period 1960 until currently. Our empirical findings suggest that high deficits, inflation and military spending have been the primary causes of debt growth in Greece. The structural break models reveal a much higher effect of deficits and inflation in the post-1990 period while the threshold switching regression, based on the level of sovereign debt, indicate that for levels of debt-to-GDP ratio above 90% deficits, inflation and military expenditures had significantly more pronounced effects on government debt changes.     

An empirical assessment of us air force

The US Air Force is facing a record shortfall in pilots over the coming decade. Using personnel data on more than 10,000 Air Force pilots, this study examines the factors affecting the retention of pilots and assesses the effectiveness of the pilot bonus programme implemented by the Air Force to reduce attrition. Although surveys indicated sustained deployment rates were the leading cause of job dissatisfaction among Air Force pilots, the results of this study suggest economic factors had the largest impact on retention.     

MODELLING THE RELATIONSHIP BETWEEN DEFENSE SPENDING AND ECONOMIC GROWTH FOR THE FIJI ISLANDS

The goal of this paper is to examine the nexus between GDP and military expenditure. We model this relationship within a multivariate framework by including exports in the model. We use the recently developed bounds testing approach to cointegration and find that there is a long run relationship among the variables when GDP is the endogenous variable. Normalizing on GDP and using four different estimators, we find that in the long run both military expenditure and exports have a positive impact on GDP. Finally, using the Granger causality test, we find that there is evidence for military expenditure Granger causing exports and exports Granger causing GDP, implying that military expenditure indirectly Granger causes GDP in the short run. In the long run, we find that both military expenditure and exports Granger cause GDP for Fiji. Our findings are consistent with the Keynesian school of thought, leading us to derive some policy implications.     

Excess procurement strategies by a dominant buyer under constrained supply

Supply chains are often characterized by the presence of a dominant buyer purchasing from a supplier with limited capacity. We study such a situation where a single supplier sells capacity to an established and more powerful buyer and also to a relatively less powerful buyer. The more powerful buyer enjoys the first right to book her capacity requirements at supplier's end, and then the common supplier fulfills the requirement of the less powerful buyer. We find that when the supplier's capacity is either too low (below the lower threshold) or too high (above the higher threshold), there is no excess procurement as compared to the case when supplier has infinite capacity. When the supplier's capacity is between these two thresholds, the more powerful buyer purchases an excess amount in comparison to the infinite capacity case.     

The Demand for Military Expenditure in Europe: The Role of Fiscal Space in the Context of a Resurgent Russia

A variant of established work on the demand for military expenditure is developed based on a practical concept of fiscal space from the perspective of short-term government choices concerning public expenditures. A new indicator, referred to as fiscal capacity, is defined and used as a candidate explanatory variable in an empirical model of European defence spending over the 2007–2016 period. Fiscal capacity is found to outperform simpler measurements of economic conditions, notably GDP growth forecasts, in explaining changes in defence spending efforts as a share of GDP. Regarding security environment variables, the results suggest that Russia has recently come to be seen as a potential military threat by European nations, leading to defence spending increases, the more so the shorter the distance to stationed or deployed Russian forces, and particularly so by those European nations that have a land border with Russia. A prospective exercise is then carried out in order to assess the capacity of EU member states that are also members of NATO to reach NATO’s 2% goal for defence spending over a mid-term horizon.     

From the sociology of the (military) profession to the sociology of (security) expertise: the case of European national defence universities

Few would disagree that European militaries have experienced dramatic changes since the end of the Cold War. Much of the discussion on these changes to date has referred to the concept of professionalism. However, this approach became outdated as professions in post-industrialist societies entered a state of crisis as a result of growing competition from a variety of competitors. The present study adapts a new framework from the sociology of knowledge literature – sociology of expertise – into one, sociology of security expertise, which is suitable for study of contemporary armed forces. Its utility is demonstrated through analysis of five European professional military education institutions. The analysis shows that European military organisations are transiting, albeit in various degrees, from one form of social organisation of military knowledge production – associated with the military education model common to traditional military colleges – toward another, which is related to the military education model of national defence universities. Hence it is highly probable that European military organisations lose, either voluntary or unintentionally, their professional character and can no longer be unquestionably assumed to be military professions. Hence, they should be analysed hereafter using the sociology of security expertise framework.