External arms embargoes and their implications for government expenditure, democracy and internal conflict

We examine how arms imports reductions due to external arms embargoes affect military expenditure, democratic quality and internal conflict in a sample of 48 countries from 1990 to 2017. We construct a theoretical model of arms restrictions influencing probabilities of peaceful and conflictual states via actions and efforts undertaken by the government and rebels to promote peace. We postulate that the effect of external arms embargoes on internal conflict is conditional, requiring empirical investigation. Our empirical analysis, based on the Panel Vector Autoregressive methods, reveals that the responses of political system and different indices of democracy to decreases in arms imports are positive, and the impact on military expenditures is negative, while the responses of education expenditures, health expenditures are positive. Despite this, our findings show that arms transfer restrictions can intensify ethnic tensions and internal conflicts.