Military expenditure - threats, aid, and arms races
AbstractUsing 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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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2927.
Date of creation: 30 Nov 2002
Date of revision:
Payment Systems&Infrastructure; Peace&Peacekeeping; Business Environment; Legal Products; Economic Theory&Research; Peace&Peacekeeping; Legal Products; National Governance; Social Conflict and Violence; Business Environment;
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