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NATO defense demand, free riding, and the Russo-Ukrainian war in 2022

Author

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  • Justin George

    (Michigan State University)

  • Todd Sandler

    (University of Texas at Dallas)

Abstract

The article applies the economic theory of alliances to uncover military expenditure burden sharing in the North Atlantic Treaty Organization (NATO) during 1991–2020, prior to Russia’s invasion of Ukraine in February 2022. In so doing, our analysis accounts for the relative locations of NATO allies through various spatial or economic weights applied to the allies’ defense spending. Such weights include NATO membership status, contiguity, US power projection, inverse distance between members’ capitals, economic trade, and contiguity to Russia. In the post-Cold War era, we uncover allies’ free riding on the aggregate military expenditure of other allies. Free riding also included reliance on the defense spending of NATO allies in proximity to Russia. Surprisingly, NATO allies reduced their defense spending as Russia increased its defense spending. The pattern of free riding and lack of response to heightened Russian defense spending likely encouraged the Russian invasion as NATO appeared divided.

Suggested Citation

  • Justin George & Todd Sandler, 2022. "NATO defense demand, free riding, and the Russo-Ukrainian war in 2022," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(4), pages 783-806, December.
    • Handle: RePEc:spr:epolin:v:49:y:2022:i:4:d:10.1007_s40812-022-00228-y
    DOI: 10.1007/s40812-022-00228-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Russo-Ukrainian war of 2022; NATO defense spending; Economics of alliances; Free riding; Spatial econometrics;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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