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

  • William Nordhaus (a1), John R. Oneal (a2) and Bruce Russett (a3)

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.

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

  • William Nordhaus (a1), John R. Oneal (a2) and Bruce Russett (a3)

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