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Military expenditure - threats, aid, and arms races

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Author Info
Collier, Paul
Hoeffler, Anke

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Abstract

Using global data for the period 1960-99, the authors estimate neighborhood arms races. They find that the level of military expenditure is strongly influenced by the expenditure of neighbors. The authors estimate an"arms race multiplier,"finding that an initial exogenous increase in military expenditure by one country is more than doubled in both the originating country and its neighbor. An implication is that military expenditure is, to an extent, a"regional public bad."Potentially, there is an offsetting public good effect if rebellions are deterred by military expenditure. However, instrumenting for military expenditure, the authors find no deterrence effect of military spending on the risk of internal conflict. So there appears to be no regional public good effect offsetting the public bad arising from a neighborhood arms race.

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Publisher Info
Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2927.

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Date of creation: 30 Nov 2002
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Handle: RePEc:wbk:wbrwps:2927

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Related research
Keywords: Payment Systems&Infrastructure; Peace&Peacekeeping; Business Environment; Legal Products; Economic Theory&Research; Peace&Peacekeeping; Legal Products; National Governance; Social Conflict and Violence; Business Environment;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Smith, Ron, 1995. "The demand for military expenditure," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 4, pages 69-87 Elsevier. [Downloadable!] (restricted)
  2. Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," World Bank Economic Review, Oxford University Press, vol. 12(1), pages 29-58, January.
  3. Paul Dunne & Sam Perlo-Freeman, 2003. "The Demand for Military Spending in Developing Countries," International Review of Applied Economics, Taylor and Francis Journals, vol. 17(1), pages 023-048, January. [Downloadable!] (restricted)
  4. Knight, Malcolm & Loayza, Norman & Villanueva, Delano, 1996. "The peace dividend : military spending cuts and economic growth," Policy Research Working Paper Series 1577, The World Bank. [Downloadable!]
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  5. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August. [Downloadable!] (restricted)
  6. Brzoska, Michael, 1995. "World military expenditures," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 3, pages 45-67 Elsevier. [Downloadable!] (restricted)
  7. Smith, R P, 1980. "The Demand for Military Expenditure," Economic Journal, Royal Economic Society, vol. 90(363), pages 811-20, December. [Downloadable!] (restricted)
  8. Brito, Dagobert L. & Intriligator, Michael D., 1995. "Arms races and proliferation," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 6, pages 109-164 Elsevier. [Downloadable!] (restricted)
  9. Murshed, S Mansoob & Sen, Somnath, 1995. "Aid Conditionality and Military Expenditure Reduction in Developing Countries: Models of Asymmetric Information," Economic Journal, Royal Economic Society, vol. 105(429), pages 498-509, March. [Downloadable!] (restricted)
  10. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Blackwell Publishing, vol. 60(3), pages 531-42, July. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. J Paul Dunne & Sam Perlo-Freeman & Ron P Smith, 2008. "Determining Military Expenditures: Arms Races and Spill-Over Effects in Cross-Section and Panel Data," Discussion Papers 0801, British University in Egypt, Faulty of Business Administration, Economics and Political Science. [Downloadable!]
    Other versions:
  2. Matteo Bobba & Andrew Powell, 2007. "Aid and Growth: Politics Matters," RES Working Papers 4511, Inter-American Development Bank, Research Department. [Downloadable!]
  3. Indra de Soysa & Eric Neumayer, 2005. "Disarming Fears of Diversity: Ethnic Heterogeneity and State Militarization, 1988–2002," Public Economics 0503008, EconWPA, revised 01 Sep 2005. [Downloadable!]
    Other versions:
  4. Matteo Bobba & Andrew Powell, 2007. "Ayuda y crecimiento: La política importa," RES Working Papers 4512, Inter-American Development Bank, Research Department. [Downloadable!]
  5. J Paul Dunne & Samuel Perlo-Freeman & Ron P Smith, 2007. "The Demand for Military Expenditure in Developing Countries: Hostility versus Capability," Discussion Papers 0707, University of the West of England, Department of Economics. [Downloadable!]
    Other versions:
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