Middle Powers And The Demand For Military Expenditures

Asia-Pacific Demand for Military Expenditure: Spatial Panel and SUR Estimates

“…This is in contrast to some recent and past research findings with respect to European countries (e.g. Murdoch and Sandler 1984;Nikolaidou 2008;Douch and Solomon 2014). Fifth, there is a large response to inverse-distance-based spatial spillovers of defense, consistent with the findings in a recent NATO study (George and Sandler forthcoming).…”

“…Due to the unavailability of panel data on the relative price (7) ln(ME) it = ∑ k≠i ln(ME) kt + 1 ln(GDP) it + 2 ln(POP) it + 3 TradeOpenness it + i + it , of defense, we drop the price variable from the estimating regressions, as previously mentioned and as is common in the literature (see e.g. Murdoch and Sandler 1984;Smith 1995;Douch and Solomon 2014). The strategic interdependence between countries in deciding their respective MEs raises endogeneity issues with respect to ME as a dependent variable and the spillover terms as an independent variable.…”

“…Moreover, the defense spillover variable is a weighted sum of the sample countries' defense spending levels, where the weights depend on some measure of connectivity, such as contiguity or nearness. This ME approach characterizes defense demand estimates by Douch and Solomon (2014), George and Sandler (forthcoming), Murdoch and Sandler (1984), Solomon (2005), and many others. Some recent spatial panel estimates of defense demand take an inductive approach and use military burdens as the dependent variable.…”

“…This theory of alliances highlights the purely public benefits of allies' defense spending, as one ally's defense provides nonrival and nonexcludable benefits to other allies that confront the same enemy states. Given the substitutability of allies' defense spending, an ally's defense demand is generally hypothesized to respond negatively to the collective defense spending (or defense spillovers) of its allies owing to free riding (Hilton and Vu 1991;Murdoch 1995;Sandler and Hartley 1995;Douch and Solomon 2014). If, however, an ally derives jointly produced country-specific and alliance-wide outputs from its defense spending, then a positive response to allies' defense spillovers may characterize an ally's defense demand (Sandler 1977;Sandler and Murdoch 1990;Sandler and Hartley 2001).…”

Defence Budgets in the Post-Cold War Era: A Spatial Econometrics Approach

“…Nikolaidou (2008) examines the demand for defence spending in the European Union from 1961 to 2005, Solomon (2005) examines Canadian defence spending from 1952 to 2001, Looney and Frederiksen (2000) examines defence spending in Latin America from the 1970s through to the mid 1990s, and Douch and Solomon (2014) examines defence spending for Middle Powers between 1955 and 2007. My focus here is solely on the post-Cold War period, as the end of that conflict was the beginning of a new paradigm in global relations.…”