Who Gets the Guns? How Conflicts and Politics Drive International Arms Transfers

Abstract

We study the factors that drive the international trade in major conventional weapons over the time period from 1971 to 2008, and show that conflicts of all types are important determinants in the demand for Arms. External war increases trade primarily along the intensive margin -- by boosting the volume imported by established arms recipients, whereas terrorism and internal conflict have a sizable impact along the extensive margin -- by opening or re-establishing trading relationships. We find important differences in the route followed by American and other Western exports as compared to Russian arms exports. US-sourced transfers favor richer and more distant countries, whereas Russia is more likely to export to geographically-proximate autocracies.

When accounting for importer-specific characteristics, Western countries are more likely to begin/resume trading relationships in response to transnational terrorism or internal conflict events, whereas the Soviet Union/Russia is more like to send weapons following domestic terrorist attacks or war involvement. Both countries ramp up exports to frequent trading partners when these partners are at war, and -- in the case of Russia -- when its partners suffer terrorist attacks. Across all income levels, countries which are more exposed to conflict are also more frequent arms importers. However, upper-middle and high income countries do not form new importing relationships in response to transitory conflicts, whereas low and lower-middle income countries do. This is consistent with the broadly-held view that inflows of weapons into poor countries help fuel conflicts and exacerbate development hurdles.

Keywords: conflict, arms trade, terrorism

JEL Classification: O19, D74, F14