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Defense Burdens, Capital Formation, and Economic Growth

Author

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  • Karen Rasler

    (Political Science, University of California, Riverside)

  • William R. Thompson

    (International Relations, Claremont Graduate School)

Abstract

One of the factors thought to explain the relative decline of system leaders is the high military overhead costs assumed by leaders. High defense burdens, however, may be achieved at the expense of investment, capital formation, and future economic growth. By evading the high defense burdens, rivals and competitors are able to improve their relative economic positions while the system leader's economic position is decaying. Focusing on Smith's (1977) earlier analysis of this phenomenon, we examine the empirical record for two system leaders (Great Britain in the nineteenth century and the United States in the twentieth century) and several other major powers. Longitudinal evidence for a defense burden-investment tradeoff is restricted to the cases of France (1872-1913) and the United States (1946-1978). These findings suggest that the tradeoff explanation may contribute to explaining some cases of leadership decline but that it will not necessarily fit all cases.

Suggested Citation

  • Karen Rasler & William R. Thompson, 1988. "Defense Burdens, Capital Formation, and Economic Growth," Journal of Conflict Resolution, Peace Science Society (International), vol. 32(1), pages 61-86, March.
    • Handle: RePEc:sae:jocore:v:32:y:1988:i:1:p:61-86
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    Cited by:

    1. Hendrickson, Joshua R. & Salter, Alexander William & Albrecht, Brian C., 2018. "Preventing plunder: Military technology, capital accumulation, and economic growth," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 154-173.
    2. Shahnawaz Sheikh & Nugent Jeffery B, 2004. "Is Natural Resource Wealth Compatible with Good Governance?," Review of Middle East Economics and Finance, De Gruyter, vol. 2(3), pages 1-33, December.
    3. S. Brock Blomberg, 1992. "Growth, political instability, and the defense burden," International Finance Discussion Papers 436, Board of Governors of the Federal Reserve System (U.S.).
    4. Julien Malizard, 2013. "Opportunity Cost Of Defense: An Evaluation In The Case Of France," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 247-259, June.
    5. Guo Ping & Alotaish Mohammed Saud M., 2017. "Revisiting the Causal Nexus between Defense Expenditure and Economic Growth: Time Series Analysis for Saudi Arabia," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 5(1), pages 35-43, March.
    6. Kimbambu Tsasa Vangu, Jean - Paul, 2012. "Analyse de la Relation Guerres Civiles et Croissance Économique [Civil Wars and Economic Growth in DRC]," MPRA Paper 42424, University Library of Munich, Germany, revised 05 Feb 2012.

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