Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Peace Economics, Peace Science and Public Policy

Editor-in-Chief: Caruso, Raul

Ed. by Bove, Vincenzo / Kibris, Arzu / Sekeris, Petros

4 Issues per year


CiteScore 2017: 0.54

SCImago Journal Rank (SJR) 2017: 0.304
Source Normalized Impact per Paper (SNIP) 2017: 0.540

Online
ISSN
1554-8597
See all formats and pricing
More options …
Volume 24, Issue 3

Issues

Volume 17 (2011)

Volume 4 (1996)

Volume 3 (1995)

Volume 2 (1994)

Volume 1 (1993)

The Determinants of Military Expenditure in Asia and Oceania, 1992–2016: A Dynamic Panel Analysis

Dongfang Hou
  • Corresponding author
  • Department of Economics, School of Economic, Political and Policy Science, University of Texas at Dallas, 800 W. Campbell Rd., Richardson, TX 75080, USA
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2018-09-06 | DOI: https://doi.org/10.1515/peps-2018-0004

Abstract

Using a dynamic panel approach, this article examines the determinants of military expenditures for 29 Asian and Oceanian countries during 1992–2016. A two-step difference-GMM estimator is applied. Both the impact of Chinese and US military expenditure on sample countries’ military budgets are considered. Results show that sample countries do not respond to Chinese military expenditure; however, these countries respond to US military expenditure. Moreover, lagged military expenditure, GDP, population, and trade openness are important determinants of military spending, while wars and regime type are not.

Keywords: demand for military expenditure; dynamic panel approach; Asia; China

References

  • Albalate, D., Bel, G., & Elias, F. (2012). Institutional determinants of military spending. Journal of Comparative Economics, 40(2), 279–290.CrossrefGoogle Scholar

  • Allansson, M., Melander, E., & Themnér, L. (2017). Organized violence, 1989–2016. Journal of Peace Research, 54(4), 574–587.CrossrefGoogle Scholar

  • Asian Development Bank. (2017a). Asian development outlook (ADO) 2017: Transcending the middle-income challenge. Manila: Asian Development Bank.Google Scholar

  • Asian Development Bank. Asian economic integration report 2017. Manila: Asian Development Bank 2017b.Google Scholar

  • Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297.CrossrefGoogle Scholar

  • Batchelor, P., Dunne, P., & Lamb, G. (2002). The demand for military spending in South Africa. Journal of Peace Research, 39(3), 339–354.CrossrefGoogle Scholar

  • Bove, V., & Brauner, J. (2016). The demand for military expenditure in authoritarian regimes. Defence and Peace Economics, 27(5), 609–625.CrossrefGoogle Scholar

  • Buzan, B. (2010). China in international society: Is ‘peaceful rise’ possible? The Chinese Journal of International Politics, 3(1), 5–36.CrossrefGoogle Scholar

  • Collier, P. (2006). War and military expenditure in developing countries and their consequences for development. The Economics of Peace and Security Journal, 1(1), 9–13.Google Scholar

  • Collier, P., & Hoeffler, A. (2007). Unintended consequences: Does aid promote arms races? Oxford Bulletin of Economics and Statistics, 69(1), 1–27.CrossrefGoogle Scholar

  • Correlates of War Project. (2013). Formal alliances data, 1816–2012, version v4.1. Retrieved November, 30 from http://www.correlatesofwar.org.

  • Correlates of War Project. (2017). Direct contiguity data, 1816–2016. Version 3.2. Retrieved November, 30 from http://www.correlatesofwar.org.

  • d’Agostino, G., Dunne, J. P., & Pieroni, L. (2017). Does military spending matter for long-run growth? Defence and Peace Economics, 28(4), 429–436.CrossrefGoogle Scholar

  • Douch, M., & Solomon, B. (2014). Middle powers and the demand for military expenditures. Defence and Peace Economics, 25(6), 605–618.CrossrefGoogle Scholar

  • Dunne, J. P., & Perlo-Freeman, S. (2003a). The demand for military spending in developing countries. International Review of Applied Economics, 17(1), 23–48.CrossrefGoogle Scholar

  • Dunne, J. P., & Perlo-Freeman, S. (2003b). The demand for military spending in developing countries: A dynamic panel analysis. Defence and Peace Economics, 14(6), 461–474.CrossrefGoogle Scholar

  • Dunne, J. P., Perlo-Freeman, S., & Smith, R. P. (2008). The demand for military expenditure in developing countries: Hostility versus capability. Defence and Peace Economics, 19(4), 293–302.CrossrefGoogle Scholar

  • Fordham, B. O., & Walker, T. C. (2005). Kantian liberalism, regime type, and military resource allocation: Do democracies spend less? International Studies Quarterly, 49(1), 141–157.CrossrefGoogle Scholar

  • Frederick, B. A., Hensel, P. R., & Macaulay, C. (2017). The issue correlates of war territorial claims data, 1816–20011. Journal of Peace Research, 54(1), 99–108.CrossrefGoogle Scholar

  • George, J., & Sandler, T. (2018). Demand for military spending in NATO, 1968–2015: A spatial panel approach. European Journal of Political Economy, 53(3), 222–236.CrossrefGoogle Scholar

  • George, J., Hou, D., & Sandler. Forthcoming. Asia-Pacific demand for military expenditure: Spatial panel and SUR estimates. Defence and Peace Economics.Google Scholar

  • Ghosn, F., Palmer, G., & Bremer, S. A. (2004). The MID3 data set, 1993–2001: Procedures, coding rules, and description. Conflict Management and Peace Science, 21, 133–154.CrossrefGoogle Scholar

  • Gibler, D. M. (2009). International military alliances, 1648–2008. Thousand Oaks: CQ Press.Google Scholar

  • Gleditsch, N. P., Wallensteen, P., Eriksson, M., Sollenberg, M., & Strand, H. (2002). Armed conflict 1946–2001: A new dataset. Journal of Peace Research, 39(5), 615–637.CrossrefGoogle Scholar

  • Goldsmith, B. E. (2007). Arms racing in ‘space’: Spatial modelling of military spending around the world. Australian Journal of Political Science, 42(3), 419–440.CrossrefGoogle Scholar

  • Gupta, S., De Mello, L., & Sharan, R. (2001). Corruption and military spending. European Journal of Political Economy, 17(4), 749–777.CrossrefGoogle Scholar

  • Harbom, L., & Wallensteen, P. (2007). Armed conflict, 1989–2006. Journal of Peace Research, 44, 623–634.CrossrefGoogle Scholar

  • Harris, G. (1986). The determinants of defence expenditure in the ASEAN Region. Journal of Peace Research, 23(1), 41–49.CrossrefGoogle Scholar

  • Hensel, P. R. (2001). Contentious issues and world politics: Territorial claims in the Americas, 1816–1992. International Studies Quarterly, 45(1), 81–109.CrossrefGoogle Scholar

  • Hughes, C. W. (2009). Japan’s military modernisation: A quiet Japan–China arms race and global power projection. Asia-Pacific Review, 16(1), 84–99.CrossrefGoogle Scholar

  • Jones, D. M., Bremer, S. A., & Singer, J. D. (1996). Militarized interstate disputes, 1816–1992: Rationale, coding rules, and empirical patterns. Conflict Management and Peace Science, 15, 163–213.CrossrefGoogle Scholar

  • Lambelet, J.-C. (1971). A dynamic model of the arms race in the Middle East, 1953–1965. General Systems, 16, 145–167.Google Scholar

  • Looney, R. E., & Frederiksen, P. C. (1990). The economic determinants of military expenditure in selected East Asian countries. Contemporary Southeast Asia, 11(4), 265–277.CrossrefGoogle Scholar

  • Maizels, A., & Nissanke, M. K. (1986). The determinants of military expenditures in developing countries. World Development, 14(9), 1125–1140.CrossrefGoogle Scholar

  • Maoz, Z., Johnson, P. L., Kaplan, J., Ogunkoya, F., & Shreve, A.(2018). The dyadic militarized interstate disputes (MIDs) dataset version 3.0: Logic, characteristics, and comparisons to alternative datasets. Journal of Conflict Resolution. DOI: .CrossrefGoogle Scholar

  • Markowski, S., Chand, S., & Wylie, R. (2017). Economic growth and demand for military expenditure in the Indo-Pacific Asia region. Defence and Peace Economics, 28(4), 473–490.CrossrefGoogle Scholar

  • Marshall, M. G., Gurr, T. R., & Jaggers, K. (2017). Polity IV dataset version 2016. Retrieved November, 30 from www.systemicpeace.org/inscrdata.html.

  • Murdoch, J. C., & Sandler, T. (1984). Complementarity, free riding, and the military expenditures of NATO allies. Journal of Public Economics, 25(1–2), 83–101.CrossrefGoogle Scholar

  • Murdoch, J. C., & Sandler, T. (1985). Australian demand for military expenditures: 1961–1979. Australian Economic Papers, 24(44), 142–153.CrossrefGoogle Scholar

  • Nerlove, M. (1958). The dynamics of supply: Estimation of farmer’s response to price. Baltimore: Johns Hopkins University Press.Google Scholar

  • Nikolaidou, E. (2008). The demand for military expenditure: Evidence from the EU15 (1961–2005). Defence and Peace Economics, 19(4), 273–292.CrossrefGoogle Scholar

  • Palmer, G., D’Orazio, V., Kenwick, M., & Lane, M. (2015). The Mid4 dataset, 2002–2010: Procedures, coding rules and description. Conflict Management and Peace Science, 32, 222–242.CrossrefGoogle Scholar

  • Pamp, O., & Thurner, P. W. (2017). Trading arms and the demand for military expenditures: Empirical explorations using new SIPRI-Data. Defence and Peace Economics, 28(4), 457–472.CrossrefGoogle Scholar

  • Rattinger, H. (1975). Armaments, detente, and bureaucracy: The case of the arms race in Europe. Journal of Conflict Resolution, 19(4), 571–595.CrossrefGoogle Scholar

  • Richardson, L. F. (1960). Arms and insecurity: A mathematical study of the causes and origins of war. Pittsburgh: Boxwood Press.Google Scholar

  • Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. Stata Journal, 9(1), 86–136.Google Scholar

  • Rosh, R. M. (1988). Third world militarization: Security webs and the states they ensnare. Journal of Conflict Resolution, 32(4), 671–698.CrossrefGoogle Scholar

  • San-Akca, B. (2015). Dangerous companions: Cooperation between states and nonstate armed groups (NAGs) v.04/2015. http://nonstatearmedgroups.ku.edu.tr.

  • San-Akca, B. (2016). States in disguise: Causes of external state support for rebel groups. New York: Oxford University Press.Google Scholar

  • Sandler, T., & Hartley, K. (1995). The economics of defense. Cambridge: Cambridge University Press.Google Scholar

  • Sandler, T., & Hartley, K. (Eds.) (2007). Handbook of defense economics: Defense in a globalized world. Amsterdam: Elsevier.Google Scholar

  • Smith, R. P. (1995). The demand for military expenditure. In K. Hartley & T. Sandler (Eds.), Handbook of defense economics (Vol. 1, pp. 69–87). Amsterdam: North-Holland.Google Scholar

  • Smith, R. P. (1980). The demand for military expenditure. The Economic Journal, 90(360), 811–820.CrossrefGoogle Scholar

  • Smith, R. P. (1989). Models of military expenditure. Journal of Applied Econometrics, 4(4), 345–359.CrossrefGoogle Scholar

  • Solarin, S. A. (2017). Determinants of military expenditure and the role of globalisation in a cross-country analysis. Defence and Peace Economics.Google Scholar

  • Solomon, B. (2005). The demand for Canadian defence expenditures. Defence and Peace Economics, 16(3), 171–189.CrossrefGoogle Scholar

  • Stinnett, D. M., Tir, J., Schafer, P., Diehl, P. F., & Gochman, C. (2002). The correlates of war project direct contiguity data, version 3. Conflict Management and Peace Science, 19(2), 58–66.Google Scholar

  • Stockholm International Peace Research Institute (SIPRI). (1983). SIPRI Year Book, Stockholm International Peace Research Institute, New York: Oxford University Press.Google Scholar

  • Stockholm International Peace Research Institute (SIPRI). (2017). SIPRI extended military expenditure database. Retrieved November, 30 from https://www.sipri.org/databases/milex.

  • Strauss, R. (1978). Interdependent national budgets: A model of US-USSR defense budgets. In Exploring competitive arms processes: Applications of mathematical modeling and computer simulation in arms policy analysis. New York: Marcel Dekker.Google Scholar

  • Töngür, Ü., Hsu, S., & Elveren, A. Y. (2015). Military expenditures and political regimes: Evidence from global data, 1963–2000. Economic Modelling, 44, 68–79.CrossrefGoogle Scholar

  • Transparency International. (2018). Corruption perceptions index. London: Transparency International.Google Scholar

  • Uppsala Conflict Data Program/Peace Research Institute Oslo. (2017). Armed conflict dataset, version 17.1. Retrieved November, 30 from http://ucdp.uu.se/downloads/.

  • Wang, Y. (2013). Determinants of Southeast Asian military spending in the post-cold war era: A dynamic panel analysis. Defence and Peace Economics, 24(1), 73–87.CrossrefGoogle Scholar

  • Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51.CrossrefGoogle Scholar

  • Wooldridge, J. M. (2015). Introductory econometrics: A modern approach (Upper Level Economics Titles) 6th Edition. Nashville: South-Western College Pub.Google Scholar

  • World Bank. (2017). World Development Indicators (WDI). Retrieved November, 30 from https://datacatalog.worldbank.org/dataset/world-development-indicators.

About the article

Published Online: 2018-09-06


Citation Information: Peace Economics, Peace Science and Public Policy, Volume 24, Issue 3, 20180004, ISSN (Online) 1554-8597, DOI: https://doi.org/10.1515/peps-2018-0004.

Export Citation

©2018 Walter de Gruyter GmbH, Berlin/Boston.Get Permission

Comments (0)

Please log in or register to comment.
Log in