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The Effects of the International Security Environment on National Military Expenditures: A Multicountry Study

Published online by Cambridge University Press:  13 July 2012

William Nordhaus ,
John R. Oneal  and
Bruce Russett
William Nordhaus
Affiliation:
Cowles Foundation, and School of Forestry and Environmental Studies at Yale University, New Haven, CT. E-mail: [email protected]
John R. Oneal
Affiliation:
University of Alabama, Tuscaloosa. E-mail: [email protected]
Bruce Russett
Affiliation:
MacMillan Center atYale University, New Haven, CT. E-mail: [email protected]
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Abstract

We consider the influence of countries' external security environments on their military spending. We first estimate the ex ante probability that a country will become involved in a fatal militarized interstate dispute using a model of dyadic conflict that incorporates key elements of liberal and realist theories of international relations. We then estimate military spending as a function of the threat of armed interstate conflict and other influences: arms races, the defense expenditures of friendly countries, actual military conflict, democracy, civil war, and national economic output. In a panel of 165 countries, 1950 to 2000, we find our prospectively generated estimate of the external threat to be a powerful variable in explaining military spending. A 1 percentage point increase in the aggregate probability of a fatal militarized dispute, as predicted by our liberal-realist model, leads to a 3 percent increase in a country's military expenditures.

Type
Research Note
Information
International Organization , Volume 66 , Issue 3 , July 2012 , pp. 491 - 513
Copyright
Copyright © The IO Foundation 2012

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