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Military expenditure - threats, aid, and arms races

Author

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  • Collier, Paul
  • Hoeffler, Anke

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.

Suggested Citation

  • Collier, Paul & Hoeffler, Anke, 2002. "Military expenditure - threats, aid, and arms races," Policy Research Working Paper Series 2927, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2927
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    References listed on IDEAS

    as
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    4. Abb, Pascal, 2013. "What Drives Interstate Balancing? Estimations of Domestic and Systemic Factors," GIGA Working Papers 238, GIGA German Institute of Global and Area Studies.
    5. J. Paul Dunne & Sam Perlo-Freeman & Ron Smith, 2008. "The Demand For Military Expenditure In Developing Countries: Hostility Versus Capability," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(4), pages 293-302.
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    7. Fay, Erik, 2020. "Public Perceptions of NATO: US Leadership and Defense Spending," SocArXiv bny96, Center for Open Science.
    8. Matteo Bobba & Andrew Powell, 2007. "Aid and Growth: Politics Matters," Research Department Publications 4511, Inter-American Development Bank, Research Department.
    9. Indra de Soysa & Eric Neumayer, 2005. "Disarming Fears of Diversity: Ethnic Heterogeneity and State Militarization, 1988–2002," Public Economics 0503008, University Library of Munich, Germany, revised 01 Sep 2005.
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    11. Matteo Bobba & Andrew Powell, 2007. "Ayuda y crecimiento: La política importa," Research Department Publications 4512, Inter-American Development Bank, Research Department.
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