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Explaining destinations and volumes of international arms transfers: A novel network Heckman selection model

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  • Pamp, Oliver
  • Lebacher, Michael
  • Thurner, Paul W.
  • Ziegler, Eva

Abstract

What determines the volumes of international weapon transfers? And why do countries establish such arms trading relationships in the first place? We propose an innovative statistical strategy that builds on the gravity approach and combines a Heckman model with a network analysis. This allows us, for the first time, to analyze the impact of network structures on both the extensive and the intensive margins of the international arms trade simultaneously. We argue that the structure of the arms transfer network conveys important information for exporting and importing countries. Therefore, past topological properties of the trade network play a central role in its future evolution. Using data on the trade of major conventional weapons between 1955 and 2018, our estimation results and out-of-sample predictions show that network structures have considerable explanatory power with respect to the creation of trade links. They are far less relevant for the explanation of trade volumes, which are mainly determined by demand factors.

Suggested Citation

  • Pamp, Oliver & Lebacher, Michael & Thurner, Paul W. & Ziegler, Eva, 2021. "Explaining destinations and volumes of international arms transfers: A novel network Heckman selection model," European Journal of Political Economy, Elsevier, vol. 69(C).
  • Handle: RePEc:eee:poleco:v:69:y:2021:i:c:s0176268021000343
    DOI: 10.1016/j.ejpoleco.2021.102033
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    More about this item

    Keywords

    Arms trade; Network analysis; Heckman; Gravity equation; Maximum likelihood;
    All these keywords.

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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