Military Expenditure: Threats, Aid, and Arms Races

23 Pages Posted: 20 Apr 2016

See all articles by Paul Collier

Paul Collier

University of Oxford - Blavatnik School of Government

Anke Hoeffler

University of Oxford - Centre for the Study of African Economies (CSAE)

Date Written: November 2002

Abstract

Using global data for the period 1960-99, Collier and Hoeffler estimate neighborhood arms races. They find that the level of military expenditure is strongly influenced by the expenditure of neighbors. The authors estimate an "arms race multiplier," finding that an initial exogenous increase in military expenditure by one country is more than doubled in both the originating country and its neighbor. An implication is that military expenditure is, to an extent, a "regional public bad."

Potentially, there is an offsetting public good effect if rebellions are deterred by military expenditure. However, instrumenting for military expenditure, the authors find no deterrence effect of military spending on the risk of internal conflict. So there appears to be no regional public good effect offsetting the public bad arising from a neighborhood arms race.

This paper - a product of the Development Research Group - is part of a larger effort in the group to study the economics of conflict.

Suggested Citation

Collier, Paul and Hoeffler, Anke, Military Expenditure: Threats, Aid, and Arms Races (November 2002). World Bank Policy Research Working Paper No. 2927. Available at SSRN: https://ssrn.com/abstract=636289

Paul Collier (Contact Author)

University of Oxford - Blavatnik School of Government ( email )

10 Merton St
Oxford, Oxfordshire OX1 4JJ
United Kingdom

Anke Hoeffler

University of Oxford - Centre for the Study of African Economies (CSAE) ( email )

Oxford OX1 3UL
United Kingdom
+44 1865 274 554 (Phone)
+44 1865 274 558 (Fax)

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