Political Accountability and Military Spending

Over the past two decades, evidence on the relationship between democratization and reductions in military spending has accumulated. This association has proven to be robust to a wide variety of specifications and samples. Nevertheless, there remain two important gaps in our understanding of this relationship. Firstly, while most studies argue that democratic political institutions constrain the incumbents’ power to allocate resources to the military, there is still disagreement about which institution. Second, empirical evidence on causality is very scarce. Endogeneity remains a difficult problem to grapple with. To address these issues, I specify a clear set of channels of interaction linking democratic political institutions to military spending. Following previous work, I also argue that political accountability constrains allocations to the military. However, I distinguish three types of accountability: horizontal, vertical and diagonal. I find that diagonal accountability is the strongest mechanism. Furthermore, I use a country’s accumulated experience with political accountability as an instrumental variable to tackle the endogeneity between political accountability and military spending. I find evidence suggesting that political accountability causes military spending as a share of GDP to fall.