Inequality in Military Expenditures and the Samuelson Rule

Abstract

In this paper, we show that standard measures used in the income inequality literature, the Lorenz curve and the associated Gini-index, can successfully be applied to the distribution of defence spending across countries. Secondly, we use the Samuelson rule to explain the distribution of military expenditures across countries over time. According to the constant defence burden interpretation of the Samuelson rule, corresponding to the diagonal in the Lorenz diagram, the defence burdens should be equal across countries. It is shown that about three quarters of the variation in military expenditures can be explained by the Samuelson rule. We then go beyond the Samuelson rule to see which countries spend much more or less than predicted and investigate which other factors may influence the defence burden.Public goods, Samuelson rule, Lorenz curve, Defence burden,

Impacts of neighboring countries on military expenditures

“…We converted the GDP data into US 2005 dollars. In addition, we can measure the size of a country by its population, in line with prior literature that highlights the benefits of such a measure, including scale effects (Dunne & Perlo-Freeman, 2003a,b;Groot & van den Berg, 2009), security (Collier & Hoeffler, 2002), and public good effects (Fordham & Walker, 2005). However, the correlation coefficient between these two variables is high (approximately 0.63), so we decided to exclude this variable.…”

“…Therefore, most people in democratic countries likely oppose high military spending. In contrast, in autocratic states, small groups of people benefit from preparations for war, if they have the power to influence or control military decisions, and the military can function in a suppressive role, eliminating potential competitors of a dictator (Groot & van den Berg, 2009). It is thus in the best interest of the dictator to support the military and allocate substantial resources to military budgets.…”

“…Many studies adopt similar reasoning (e.g. Collier & Hoeffler, 2007;Goldsmith, 2007;Groot & van den Berg, 2009;Mulligan, Gil & Sala-i-Martin, 2004). Fordham & Walker (2005) provide a more thorough reasoning, based on international relations theory and Kantian liberalism, arguing that liberal states allocate fewer resources to their militaries than autocratic states.…”

Does Military Spending Impede Income Inequality? A Comparative Study of Pakistan and India

“…4 The ARDL bounds testing is used in this article and results show that one-way causality from defence spending to inequality in the case of Malaysia and bidirectional causality exists for the situation of Singapore and no significant relationship found in the rest of the countries. Groot and Van Den Berg (2009) also study the income inequality and military expenditures applying the Samuelsson rule in 102 countries from 1970 to 1985. The results of the study evident the positive impact of per capita income on the military expenditures.…”