Preventing Plunder: Military Technology, Capital Accumulation, and Economic Growth

47 Pages Posted: 28 Aug 2017 Last revised: 22 Jul 2018

See all articles by Joshua R. Hendrickson

Joshua R. Hendrickson

University of Mississippi; American Institute for Economic Research

Alexander William Salter

Texas Tech University - Rawls College of Business; American Institute for Economic Research

Brian C. Albrecht

University of Minnesota - Twin Cities - Department of Economics; American Institute for Economic Research

Date Written: August 24, 2017

Abstract

A growing body of research highlights the correlation between strong, centralized states and economic growth. Given the important role that national defense has played in the development of the state, it seems as though this would imply some relationship between military expenditures and economic development. However, there is no consensus on the direction of the relationship between military expenditures and economic growth. In this paper, we propose a resolution to this puzzle. We argue that military technology is a limiting factor for wealth (and therefore capital) accumulation. Since wealth must be protected from plunder and/or destruction, the amount of wealth that can be accumulated is constrained by a society's ability to adequately defend it. We present a theoretical model consistent with this idea and perform a Monte Carlo experiment to determine the implications of this hypothesis for empirical work. We find that the long-run relationship between military expenditures and private production is positive. However, in sample sizes consistent with existing data, the relationship is ambiguous. As a result, we provide support for this idea by relying on historical examples consistent with our hypothesis. Finally, we consider the implications of our hypothesis for the development of state capacity.

Keywords: national defense, economic growth, military technology

JEL Classification: O40

Suggested Citation

Hendrickson, Joshua R. and Salter, Alexander William and Albrecht, Brian C., Preventing Plunder: Military Technology, Capital Accumulation, and Economic Growth (August 24, 2017). Available at SSRN: https://ssrn.com/abstract=3025548 or http://dx.doi.org/10.2139/ssrn.3025548

Joshua R. Hendrickson (Contact Author)

University of Mississippi ( email )

Oxford, MS 38677
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

Alexander William Salter

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

HOME PAGE: http://awsalter.com

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

Brian C. Albrecht

University of Minnesota - Twin Cities - Department of Economics ( email )

Department of Economics, University of Minnesota
Hanson Hall 4-101
Minneapolis, MN 55455
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
127
rank
210,922
Abstract Views
797
PlumX Metrics