Does Neutrality Make a Difference? Explaining Patterns of Swiss Defense Spending in 1975-2001

Abstract

We study the behavior of defense spending in Switzerland in 1975-2001. Our main interest is in determining how neutrality in international affairs (non-membership in military alliances) affects defense spending. We find that neutrality is associated with a perception of lower levels of external threat; hence it confers economic benefits in the form of a smaller defense burden. However, neutrality does not fully insulate a country from variations in the level of external threat in the global system as perceived by members of military alliances. Swiss defense spending has tracked very closely the spending trends - but at a lower average level - of the United States and other NATO countries. To the extent post-Cold War threats, such as international terrorism, materialize primarily in the context of existing security alliances, Swiss military spending patterns observed in 1975-2001 are likely to remain the same in the future.

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Keywords: defense spending, neutrality, alliances, threat, security, Switzerland