Internal and External Factors in Effecting Third World Military Expenditures

Recent research on the determinants of Third World military expenditures has indicated that economic variables show great promise in providing a framework as to the underlying causes of Third World defense allocation decisions. Building on this research, we test the hypotheses that the level of military expenditures in developing countries is determined in large part by economic constraints relative to external (threat) factors. In general this hypothesis is borne out with the important qualification that countries without an arms industry appear relatively more affected by external factors than countries with an arms industry. The main implication of the analysis is that a reduction in Third World arms production would most likely result in lower overall levels of military expenditures in these countries.