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The Demand for Military Expenditure in Developing Countries: Hostility versus Capability

Author

Listed:
  • J Paul Dunne

    () (School of Economics, University of the West of England)

  • Samuel Perlo-Freeman

    () (School of Economics, University of the West of England)

  • Ron P Smith

    () (Birkbeck College, London)

Abstract

This paper has considers the interpretation of the empirical results of the developing literature on the demand for military spending that specifies a general model with arms race and spillover effects and estimates it on cross-section and panel data. It questions whether it is meaningful to talk of an ‘arms race’ in panel data or cross-section data, and suggests that it may be more appropriate to talk about the relevant variables – aggregate military spending of the ‘Security Web’ (i.e. all neighbours and other security-influencing powers) and the aggregate military spending of ‘Potential Enemies’– as acting as proxies for threat perceptions, which will reflect both hostility and capability.

Suggested Citation

  • J Paul Dunne & Samuel Perlo-Freeman & Ron P Smith, 2007. "The Demand for Military Expenditure in Developing Countries: Hostility versus Capability," Working Papers 0707, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  • Handle: RePEc:uwe:wpaper:0707
    as

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    File URL: http://carecon.org.uk/DPs/0707.pdf
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    References listed on IDEAS

    as
    1. Aamer S. Abu-Qarn & J Paul Dunne & Yasmine M. Abdelfattah & Shadwa Zaher, 2010. "The Demand for Military Spending in Egypt," Working Papers 1001, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    2. Collier, Paul & Hoeffler, Anke, 2002. "Military expenditure - threats, aid, and arms races," Policy Research Working Paper Series 2927, The World Bank.
    3. Paul Dunne & Sam Perlo-Freeman, 2003. "The Demand for Military Spending in Developing Countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 23-48.
    4. James Murdoch & Todd Sandler, 2002. "Civil wars and economic growth: A regional comparison," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(6), pages 451-464.
    5. Ron Smith & Martin Sola & Fabio Spagnolo, 2000. "The Prisoner's Dilemma and Regime-Switching in the Greek-Turkish Arms Race," Journal of Peace Research, Peace Research Institute Oslo, vol. 37(6), pages 737-750, November.
    6. Dunne, J. Paul & Smith, Ron P., 2007. "The Econometrics of Military Arms Races," Handbook of Defense Economics, Elsevier.
    7. Solomon Polachek & Carlos Seiglie & Jun Xiang, 2005. "Globalization and International Conflict: Can FDI Increase Peace?," Working Papers Rutgers University, Newark 2005-004, Department of Economics, Rutgers University, Newark.
    8. J. Paul Dunne & Sam Perlo-Freeman, 2003. "The demand for military spending in developing countries: A dynamic panel analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(6), pages 461-474.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bove Vincenzo & Elia Leandro & Pelliccia Marco, 2016. "Centrality in Trade Networks and Investment in Security," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(1), pages 27-39, January.
    2. Vincenzo Bove & Roberto Nisticò, 2014. "Coups d’état and defense spending: a counterfactual analysis," Public Choice, Springer, vol. 161(3), pages 321-344, December.
    3. Töngür, Ünal & Hsu, Sara & Elveren, Adem Yavuz, 2015. "Military expenditures and political regimes: Evidence from global data, 1963–2000," Economic Modelling, Elsevier, vol. 44(C), pages 68-79.
    4. Kotera, Go & Okada, Keisuke, 2015. "How Does Democratization Affect the Composition of Government Expenditure?," MPRA Paper 67085, University Library of Munich, Germany.
    5. David K. Levine & Salvatore Modica, 2013. "Conflict, evolution, hegemony, and the power of the state," Working Papers 2013-023, Federal Reserve Bank of St. Louis.
    6. Bove, Vincenzo & Efthyvoulou, Georgios & Navas, Antonio, 2017. "Political cycles in public expenditure: butter vs guns," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 582-604.
    7. Bove, Vincenzo & Nisticò, Roberto, 2014. "Military in politics and budgetary allocations," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 1065-1078.
    8. Elisa Cavatorta & Ron P. Smith, 2017. "Factor Models in Panels with Cross-sectional Dependence: An Application to the Extended SIPRI Military Expenditure Data," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(4), pages 437-456, July.
    9. repec:taf:defpea:v:27:y:2016:i:5:p:609-625 is not listed on IDEAS
    10. Stadelmann, David & Portmann, Marco & Eichenberger, Reiner, 2015. "Military careers of politicians matter for national security policy," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 142-156.
    11. Sarah Langlotz & Niklas Potrafke, 2016. "Does Development Aid Increase Military Expenditure?," CESifo Working Paper Series 6088, CESifo Group Munich.
    12. Nadezhda V. Baryshnikova & Ngoc T.A. Pham & Maria M. Wihardja, 2016. "Does Political and Economic Inequality Affect Institutional Quality?," The Economic Record, The Economic Society of Australia, vol. 92(297), pages 190-208, June.
    13. d'Agostino, Giorgio & Dunne, John Paul & Pieroni, Luca, 2013. "Military Expenditure, Endogeneity and Economic Growth," MPRA Paper 45640, University Library of Munich, Germany.
    14. Giorgio d'Agostino & J Paul Dunne & Luca Pieroni, 2016. "How much does military spending affect growth? Causal estimates from the World's non-rich countries," SALDRU Working Papers 196, Southern Africa Labour and Development Research Unit, University of Cape Town.
    15. Albalate, Daniel & Bel, Germà & Elias, Ferran, 2012. "Institutional determinants of military spending," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 279-290.
    16. Unal Tongur & Sara Hsu & Adem Yavuz Elveren, 2013. "Military Expenditures and Political Regimes: An Analysis Using Global Data, 1963-2001," ERC Working Papers 1307, ERC - Economic Research Center, Middle East Technical University, revised Jul 2013.
    17. Christos Kollias & Suzanna-Maria Paleologou & Panayiotis Tzeremes & Nickolaos Tzeremes, 2017. "Defence expenditure and economic growth in Latin American countries: evidence from linear and nonlinear causality tests," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-25, December.
    18. Farzanegan, Mohammad Reza, 2017. "The impact of oil rents on military spending: Does corruption matter?," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168157, Verein für Socialpolitik / German Economic Association.
    19. repec:eee:jeborg:v:137:y:2017:i:c:p:145-159 is not listed on IDEAS
    20. Vincenzo Bove & Jennifer Brauner, 2016. "The demand for military expenditure in authoritarian regimes," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(5), pages 609-625, September.

    More about this item

    Keywords

    Military Spending; Developing Countries; Demand.;

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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