Centrality in Trade Networks and Investment in Security

Vincenzo Bove, Leandro Elia and Marco Pelliccia

Abstract

The contemporary empirical literature on military spending has focused on institutional and conflict factors, and although has acknowledged the role of trade openness, it has not taken into account the position of a state in the trade network. Building on the concept of network centrality, we claim that the structure of trade networks affects the optimal investment in security, and that a country’s level of military spending is a function of its strategic position in the global network of a critical commodity, such as oil. Our empirical results show that network centrality constrains military spending.

  • Alptekin, A., Levine, P., (2012), Military Expenditure and Economic Growth: A Meta-Analysis, European Journal of Political Economy, vol. 28, no. 4, pp. 636–650.

  • Bove, V., Nisticò, R., (2014a), Coups d’état and Defense Spending: A Counterfactual Analysis, Public Choice, vol. 161, no. 3–4, pp. 321–344.

  • Bove, V., Nisticò, R., (2014b), Military in Politics and Budgetary Allocations, Journal of Comparative Economics, vol. 42, no. 4, pp. 1065–1078.

  • Bove, V., Elia, L., Sekeris, P.G., (2014), Us Security Strategy and The Gains from Bilateral Trade, Review of International Economics, vol. 22, no. 5, pp. 863–885.

  • Bove, V., Gleditsch, K.S., Sekeris, P.G., (2015), ‘Oil Above Water’ Economic Interdependence and Third-Party Intervention, Journal of Conflict Resolution, doi:10.1177/0022002714567952.

  • Caruso, R., (2006), A Trade Institution As a Peaceful Institution? A Contribution To Integrative Theory, Conflict Management and Peace Science, vol. 23, no. 1, pp. 53–72.

  • Caruso, R., Di Domizio, M., (2015), Interdependence Between Us and European Military Spending: A Panel Cointegration Analysis (1988–2013), Applied Economics Letters. doi:10.1080/13504851.2015.1071466.

  • Colgan, J. D., (2014), The Emperor Has No Clothes: The Limits Market, International Organization, vol. 68, no. 03, pp. 599–632.

  • Dorussen, H., (2006), Heterogeneous Trade Interests and Conflict What You Trade Matters, Journal of Conflict Resolution, vol. 50, no. 1, pp. 87–107.

  • Dorussen, H., Ward, H., (2010), Trade Networks and the Kantian Peace, Journal of Peace Research, vol. 47, no. 1, pp. 29–42.

  • Dunne, J.P., Perlo-Freeman, S., (2003), The Demand for Military Spending in Developing Countries: A Dynamic Panel Analysis, Defence and Peace Economics, vol. 14, no. 6, pp. 461–474.

  • Dunne, J.P., Smith, R.P., (2010), Military Expenditure and Granger Causality: A Critical Review, Defence and Peace Economics, vol. 21, no. 5–6, pp. 427–441.

  • Dunne, J.P., Smith, R.P., Willenbockel, D., (2005), Models of Military Expenditure and Growth: A Critical Review, Defence and Peace Economics, vol. 16, no. 6, pp. 449–461.

  • 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, vol. 19, no. 4, pp. 293–302.

  • Feenstra, R.C., Lipsey, R., Deng, H., Ma, A.C., Mo, H., (2005), World Trade Flows: 1962–2000, NBER Working Paper, 11040.

  • Freeman, L.C., (1979), Centrality in Social Networks Conceptual Clarification, Social Networks, vol. 1, no. 3, pp. 215–239.

  • Jackson, M.O., Nei, S., (2014), Networks of Military Alliances, Wars, and International Trade.

  • Kim, H.M., (2009), Introducing the New Concept of National Power: From the Network Perspective, Peace Economics, Peace Science and Public Policy, vol. 15, no. 1, pp. 1–15.

  • Kinne, B.J., (2012), Multilateral Trade and Militarized Conflict: Centrality, Openness, and Asymmetry in The Global Trade Network, The Journal of Politics, vol. 74, no. 01, pp. 308–322.

  • Kollias, C., Paleologou, S.-M., (2013), Guns, Highways Growth in the United States, Economic Modelling, vol. 30, pp. 449–455.

  • Maoz, Z., (2009), The Effects of Strategic and Economic Interdependence on International Conflict Across Levels of Analysis, American Journal of Political Science, vol. 53, no. 1, pp. 223–240.

  • Murdoch, J.C., Sandler, T., (1984), Complementarity, Free Riding, and The Military Expenditures of NATO Allies, Journal of Public Economics, vol. 25, no. 1, pp. 83–101.

  • Nordhaus, W., Oneal, J.R., Russett, B., (2012), The Effects of the International Security Environment on National Military Expenditures: A Multicountry Study, International Organization, vol. 66, no. 03, pp. 491–513.

  • Olson, M., Zeckhauser, R., (1966), An Economic Theory of Alliances, The Review of Economics and Statistics, vol. 48, no. 3, 266–279.

  • Pieroni, L., (2009), Military Expenditure and Economic Growth, Defence and Peace Economics, vol. 20, no. 4, pp. 327–339.

  • Sandler, T., Murdoch, J.C., (1990), Nash-Cournot or Lindahl Behavior?: An Empirical Test for the NATO Allies, The Quarterly Journal of Economics, vol. 105, no. 4, pp. 875–894.

  • Smith, R.P., (2009), Military Economics: The Interaction of Power and Money, Palgrave Macmillan.

  • van Ypersele de Strihou, J., (1967), Sharing the Defense Burden among Western Allies, The Review of Economics and Statistics, vol. 49, no. 4, 527–536.

Purchase article
Get instant unlimited access to the article.
$42.00
Price including VAT
Log in
Already have access? Please log in.


Journal + Issues

The main objectives of Peace Economics, Peace Science and Public Policy are to further research in Peace Science and Peace Economics, to expose the scholarly community to innovative peace-related research, to disseminate the study of peace economics to a wider audience.

Search