The determinants of military expenditures in developing countries

The Determinants of Military Expenditures Developing Countries ALFRED

in

hlXIZELS and hlACHIK0 K. NISSANKE’” lJui~wsit_v Collegr, Lor~th

Summary. -

l.hl\ paper flr\t diwrrw~ the rcbult\ of varioub quantitative \tudic\ of the imp;lct of It concludes that thcrc i\ littlc militarv spending on economic grouth in dciclopin : countrla. doubt that thih impact i\ gcnerall! ncsative. l‘hc paper then proccccl\ to con\idcr ths main factors influencing the Ic\cI of mllit~try c\-penditure Itbclf. The nnaly\i\ ib dcvcloped irom ;I conceptual matrix covcrins the national. rcgion,d and global Ievcls. each being divided into political. military and economic aspect\. The quantitative nnalysi\. based on crohs-countrv rcgrcssions for the period 197s to IW). indicates that differences among dcvclopinp countric>.in the rclativc Gzc of thclr military burdens rellcct a comples of fact(,rs. both domcstic/rc_rional and global. and hoth political/militar~ and economic.

INTRODUCTION

I.

higher

lY6G-65. military

The pat sion

decade ha5 witnessed a sharp exp;m-

in military

developing

espeiiditurcs countries.

in a large

;I

trend

number

which

of

would

GDP)

Lvcrc

positively

rates.

However,

longer period. reflecting

al economic

amvng economists tary espenditure little

cmpirkil

xiswcr

regarding

analysis

the

does,

developin,g

countries

The

pracnt

iis in

article

multiple

issue

attcmpth

-

;I

study

by

i.e.

on this the

relationship

between

growth

1-i

period over

this

of

l%O-65 period

by

militq do

a qu;mtitativc factors

expenditure of

cross-

for ;I recent 1Y7S-SO).

I~teratue

the

on

impact

of

late

issue Emile

defense

devel,oping (Benolt.

Benoit

spending countries

lY73).

and also over

He

of

and GDP over found

the shorter

economic

the that.

period

seem Ball

rates

growth.

to

military

and In

sccned

a

to be

of bilater-

from

Bcnoit’s

(1’453) argues.

may be attributed

However.

higher

higher

that for the

levels ot bilateral

attributed

positive

he argued

levels

Benoit

preferred

expenditure

negative later

that his analysis

aid.

higher

article

effects

of

cm on

(Benoit,

did suggest

that

on

balance military expenditure encouraged economic growth in developing countries. It could be argued LJpriori that the principal negative

off

that

both

larly

the

would

growth

be

lvith

burden

as Nicole

higher

of civilian

the intlucncc

degree to higher

argue

lY7S).

It

expenditure.

But

military

was sparked

to

have

aid. results.

cannot

first

is called for.

-

they military

growth.

means

grolvth

to

espenditurc’!

analysis

the

in some

IMPACT OF &IILITARY ON ECONO~IIC GROWTH

The controversy by

if

of military

of the

on economic

7 THE EXPEkDITURE

why.

of the vexs

review

mentioned

expenditure

to

regression

average

klowever.

the more important

countria

developing (the

that while

such

of some of

a brief

of mili-

growth.

retard

in

period

the impact

fact.

the le~l

first

regression

increase

\vhich influcncc country

interest

has yet been :itt~mptcd

question

expenditure

assessment

much

on economic

associated

the defense

as

(defined

he also found

to some extent

establishment

~timulatrd

burdens

as a percentage

growth

appear to run counter to their domestic dcvelopmcnt needs. This espansion in the militar\ has also

defense

expenditure

effect

of military

expenditure,

particu-

in developing countries typically short of resources resources, would be that additional used for military purposes necessarily mean less for investment and production in the civilian

*The authors are grateful to the Leverhulme Trust for financing this research, which forms part of a wider study of the economic relationships between developed and developing countries. They would also like to thank two anonymous referees for their detailed and perceptive criticisms of an curlier draft, as well as the discussants at a colloquium on ‘Defence. Security and Development’ held at Birkbeck College. London in March 19%.

ector.

Thlb

effect.

particul,lrl) ture

has ;t higher

the

share

of

slgnlticant. \\hcrc of

products

in\,estmrnt. measured

the military in the sense

GDP

sector

kvill.

efft’ct

on

-

a shift

wWi.c

distingtkhrd

;I

potential

of

number

for

and

civilian

is rrlati\el>

In

of contributing resourct”i

to

to

that

result in a negative fiowevrr. Benoit

grouth.

each of tvhich

reducing

goods

sector

prihs.

economic

thus

required

-

hc

espendl-

capital

Since

unproductive

\\ould

militar>

import-content,

imports

intermediate

effects.

It

important

of

p(xsihle

offsetting

\\ould tend to enhance

(on

indirect

in

countries

for

clischur~ed military personnel into more productive civilian kvorkcrs; the construction of basic infrnstructurc. such as roads. which were likclv to yield csternal

empirical

results

economics

military

the

imparting

training.

Lvhich

of technical would

of advantqc

and the adoption and fiscal intensive

utilization

of

in recent

heen to throw for

off” 50

doubt

negative

relation

expenditure education an

likelv

increase the

formation

of skill5

and. xnsc.

analysis

by

between

the shares

in

IX

Verncr

Latin

IYlS-7Y

there

one country, and

remaining

st‘vcn

of

much For

no should

needs.

one element

in general

general

of social

countries

1’976. This

indes

ber of school

physicians expenditures

per

GDP)

be

civilian

rcduccrl

in

to human

traclc-

trxlc-off

in IO in

the

read

into

these

that

is

also the

makes

education

(lYS3)

computed

development each

year

both I.000

on

a mure

levels from

for 26 I967

education

to

(num-

population.

on

and

is only

spending

and

education

health

(number

and government

as percentage

of GDP).

the

levels

of

consiclerabl]

imposed

policy.

the

line

Ball use

she

the

financial

rt’sources.

private

aid

of Benoit’s

of the defense

as

financial

of

economic

growth. interpretation

was tlawed.

been

hi5

and

hi> statistical has criticized underlying one part.

ignored

calculations

as against

Moreover.

of

foreign bias

the

in favor

the inflow

of

for changes

Bull his

inflow

aid and military \v;~> to

in accounting of

to criticize

of the total

hare

He had argued

been

up in the

;I> the

argues.

burden.

has

aid is only

statistical

resources,

the This

by the ux

taken

multilateral

convincingly

to

the Iekt‘l of military

part, To

investment,

she

argues.

results of in particular.

bilateral

small

this

and

variable

Lvhich can ‘.esplain” since

aid

esport-

of ptx)plc.

has

of

(1983). of bilateral

a relatively

Benoit’s

Clites.

populations

of attack

of

an

flowever.

is a point

definition

expenditure.

results

social

This

of

primaril!

to the concentration

World

force.

section. second

point

foreign

adoptins

development.

Benoit’s

GSP.

of large numbers

on Third

of military

aid,

by

es-

strategy

by attracting

and

on

fundrtmsntal

increase

industrial

resources

often

more

to

the

a job.

development

has led in prxtict:

variable

qvcrnment

be

find

industrialization

orientated

next A

to

the

was

investment

strategy of

unable

time

through and

with

conventional

Benoit’s

relation

to

to the skill

would

more

that

armed

promoted

in

cost

and

i:, high.

inequitable

the period

may

professional

relationship defense

She

forces, bvhile where urban unemployment such benefits would be negated if

impoverishm~rlt

OF

of

growth.

civilians:

training

countries

qu-

effects

good3 and st’r\ ices

sector

economy

her

militxr)

detailed

positive

civilian

by

of military

analysis. Benoit’s

100 population.

on health

benefits

on the kind

per

produced

that

economic

military

for 50

that

propensity.

potential on

on the

a+iin -

Benoit’s

that

the

interpretation

expenditures of

if

much depends

covered

trachcrs

government percentage

for

in

a time series

trade-off

illorcover.

Nabe

index

African

over

a positive

not

being

services.

and

the

countries.

development social

the

to

was ;I negative

significant

one: thing.

education

of

countries

that

off in only

Too

I lowever.

was

in the

devoted

prc’sumably.

(I%+.?)

countries

results.

not increases.

of education

American

showed

In other

burden

savings

espenditure

Ball

for

clearly

of

irtrcr dirr

the

sho\ved

criticizes

favor

serviceman

public

allowing

product

in the aider

period

of

both.

in

produced

of military

dcfcnse

reductions.

that

significant

GNP.

the

national

the

share

to intlucnce ‘in

of positive

share

the

in

has

has shown ovt’r

the

and

sharp

of attack

statistically

txtwccn

with

of

capital

;I

expenditure

associated share

(IOSI)

ments

-

lY65-73

reduced

( lYS.3)

than

under

line

countries.

GDP

variables

words.

conic

Ball

she found

fol

expenditure

Infiows.

period

b>

;\llowing

military

capital

etc.). the

expenditure

qua.

a more

resources.

on the t’xistence

was

in

nionetar!,

promote

One

Deger

developing there

other

has

years.

effects.

1965-73,

may

available

argument

criticism

production:

of more espanzionary which

militq

to make

to ciCilian

politics.

Bcnoit’s

“spin

help

skill>

of taxation.

the and

;I\ indicated ~;I\c.

of

foreign

<)ff”

for

tl\penJiturr

to

effects on

.-hpln

ma&l

mobillz;ltion

propensity

intlation.

thf

;I

militar)

resourct2

average

on

test3

brtkvren

domestic the

attack

(IW?)

level

for gro\vth.

included.

relationship

various

the

general

Deger

in particu-

Iar.

Thee

murc‘

;I

thesib.

argues

statistical

that these

results

in

that results may

\f!LIT’.L\R\I’

E.‘iPESDUL’RES

IV DE\‘ELOI’I\(;

ovrrsimplifv realitv in xo far as greater military expenditure by certain developins countries vvrll attract additional bilateral aid. However. as Ball remarks. even if this were true. one cannot conclude that it vvas military espenditure per .st’ uhich led to hisher growth r;iteh. Third, and in some way5 the most important attack. has come from authors aho criticize Bsnoit for having used a simplistic sin+equation regession approach when u hat is required is an explicit theoretical model to ensure that the interrelations among the relevant vnriables are properly taken into account. The macroeconomic approach based on the national accounts identities was pioneerrd ‘by Smith ( 1977; IYSO), and s~eral versions have been developed by Deger (1YSl: lYS7). De_cer and Sen (lYS3). Deger and Smith (lYS.3) xnd Faini. Annez and Taylor ( IYS-1). A somewhat different approach. based on the Harrod-Domar model, was used b\- Lim (lYX3). VVithout exception. these studies show that the share of military expenditure in GDP is negatively associated with the growth rate of GDP. vvhethcr the result is based on cross-country regressions or pooled cross-country time series rcgression4. Benoit’s ari$nal data have recently been rev.orked by Frcderiksen and Looney ( 1YS3). vvhho divided the sample into two groups of countries. r,i-_. the “resource abundant” and the “resource constrained.” They found that the relationship of the military burden to growth of civilian GDP was positive for the former Sroup. but negative for the latter. the coefficients in both GIXS being sigificant at the 1’1;) level. These results have been criticized by Ball (lYS5). mainly on the grounds that they derive from the Benoit study, which had serious limit;ition~. and that they are based on an oversimplified view of the complex of forces acting upon military spendins levels. The present authors have derived estimates for a more recent period (lY7_34’0), details of which will bc published separately. based on crosscountry regressions using a two-stage model (the GDP growth rate and the chanpe in the proportion of investment to GDP being the two dependent variables) for some SO developing countries. The results generally confirm the negative relation between military expenditures and economic growth found by earlier studies. Incidentally. a separation of the sample into two country groups (“resource abundant” and “resource constrained”) failed to replicate the Frederiksen-Looney result. These various estimates of the quantitative effect of the military burden on the economic growth of developing countries are summarized

C‘OI’VI’RIES

1127

in Table I. It seems clear that the impact of military expenditure on economic rgoath varies u-i&Iv among the three regions. a point emphasized by both Lim (IYS3) and Faini (‘I ~11.(19%). No hubt the hame is true ;I> between different countries in the same region. and even in mdividual countries over time. For developing countries ;I!, a proup. the estimates also vary widely in magnitude. a resultant, at least in part, of differences in model specification. countrv coverage and dicta sources. yonetheless, there seems little doubt that. taken toeether. these studies negate the Brnoit thesib and that. for probably the majoritv of developing countries. poiicy choices involvin, u militarv _ versus civilian expenditures are essentiallv zero-sum. or even negtive-sum. games in terms of overall economic prowth. The drastic deterioration in the economic position of developinp countries since lY80 has made such policy choices even more crucial to the development process. it is indeed ironic that at a time when the maximum mobilization of domestic resources for recovery is needed, that internal unrebt in ninny countries (often precipitated by lhtF conditionality) is resulting in substantial cspenditure for military purposes. This brings us back to the question posed earlier, namely, if military expenditure is demonstrably detrimental to economic growth. why do developing countries spend substantial proportions of their limited national rtlsources for military purpoxs’!

3. OUXNTITATIVE

ANALYSIS

Almost all the quantitative analysis of the impact of military expenditure on the economic growth of developinp countries has taken such expenditure as cxogenously given.’ This is not, since the traditional nroperhaps. surprising classical approach - which views the role of the State as balancing the welfare benefits of extra security derived from military expenditure with its opportunity cost in terms of foregone civilian output- - appears particularly difficult to apply. if not being largely irrelevant. to the majority of developing countries. Neoclassical economic theory assumes that the State - whose decisions determine the level of military expenditure - is politically neutral and that its view of the need for “security” is based on serving the interests of the entire society. However, in developing countries the concept of State security typically involves the need for repression

of

domestic

opposition

for

need

aggression. \vhere -

these

IYS3)

-it

are

Even

the

quently, ~ng the

forces

related, From the

ruling

;I

in part,

military

groups.

a curvilinear

power,

effort

to a certain

repression

after will

threshold.

significantly

from

military on

be the domestic

of this

domestic

issue the

political of military militarv

the degree

for

This

who

maintain it.

it

and

was carried

drain

of propaganda. repression.”

this

may

instabilitv

may

competition

apparatus.

be

in the

in

the the

to

upon masses will is the

consumption in

this

( 196S). based the

U’hilr

predominant others

elite.

refers

explains Haiti.

is

problem

minor

many

derive for

of to this

by Luttwak

which

expenditure countries,

it

that revolution.

lk’hynes

to ;I model

approach.

contlict

from

suppression solution

eiite

improve

so much

benefits

military

a

-

bv ~Vhvnes

the

and possibly

employment

on

ot

explanatory

further

resources

eventual

connection

opposition

‘.if

tha:

them

An effective and

may:

level

engender

considerable

arzued

exploitinp

the

a hish

countries.

its posttton.

must

without

since

domestic

have

certain

instabil-

hypothesis

eventually

of

approach

(lY7Y),

and of

upsurge

this

-

itself

nonetheless

many

but can actually

increasing reduce

may power

occur.

between

threshold

is not inhibited

that

be

intluence

analyst

and

military must

power.

relationshtp

Up

Conse-

would

elites

early

military

instability

worsen:

in

the primary

An

of

to the need for

to dominant

postulated of

level

elites

is

to analyz-

countries

expenditure

opposition level

the

ruling

viewpoint,

degree of threat

instability.

approach

may

of political

Though

mechanical

renewed

civi-

and thus

1971).

repression

is typically

elite.

opposition

(Terrcll.

be unduly

(Sivard, with

political ity

power

that the State

social

developing

maintain of

majority

be assumed

influencing in

this

level

the

satisfactory

at least to

in

taken

apparatus

a more

expenditure

countries

the State of

the

in developing

countries

hands

force

now

25

cstcrnal

in developing

lian governments. in

uell

possihlc

have themselves

can hardly

neutral.

as

against

In particular,

the military

and

youp,

protection

level

of

inter-class feature

much

from

intra-elite

control

over

for

of

the

conflict the

State

SlILIThR~

ESPEXDITL’RES

In any event, this type of model, while suitable for countries governed by dictatorships or military juntas may. however, be less applicable in other cases uhere the predominant concern of in determining their military governments espenditure is political tension with, or potential aggression from. neighboring countries. The Arab/Israeli and Iraq/Iran contlicts. and the political tensions between India and Pakistan. and Greece and Turkey. are good examples of such concern. In such cases. the degree of internal social conflict may bear little relation to the magnitude of military force aimed at by governments. Apart from internal conflict and regional tensions (or wars). a third element which may also have become of increasing significance in recent years as an influence on the military expenditure of developing countries is their degree of involvement in either of the global power blocs. To the extent that a developing country adheres to a global political/strategic alliance. provides facilities for foreign military bases, and depends on a superpower or its allies for its military equipment and personnel training, it may also come under pressure to expand its own military establishment. partly to enhance the potential of a foreign military base. and partly as an instrument in support of power bloc regional policy. This last point may also be relevant to a number of regional conflicts, including wars, where contending countries are each supported by arms and finance from a different global power bloc. This distinction between domestic, regional and global conflicts provides a useful framework for a classification of the various potential

IN

DE\‘ELOPI\G

influences on the level of military expenditure of developing countries. Table 2 sets our such a classification. which also distinguishes the specific military intluences from the underlying political/strategic and economic ones. At the national level. political instability and civil conflict have already been mentioned and these can be assumed to be related to a greater or lesser degree of internal repression. At one extreme. domestic conflict can develop into civil war. There is little doubt that over the postwar period civil wars in developing countries have been far more destructive of life and property than have inter-State wars. Over the period 1945-76. for example. Kende (IYSC)) has recorded 102 separate civil wars (of which 73 were with an average duration of 35’2 anti-regime), years, while in this period there were, on Kende’s definition. 18 inter-State wars between dsveloping countries. with an average duration of 7 months. Apart from internal repression and civil war situations. the nature of the State itself is likely to be an important influence. since a military dictatorship can be expected to maintain a larger military establishment. cefrris pwibus. than would a democracy. This consideration is also closely related to the power of the military, even in a country with a civilian government: the more powerful the military in relation to the civil power, the greater the chances that the military can increase its share of the government budget. There are also a number of specifically economic influences at the national level to be considered. First. the level of economic development would seem to be a relevant factor, in so far as higher levels of development imply structural changes in society, greater urbanization. greater

Regional

National

Political framework

I

Nature of the State

Military

4.

Vested interests of military establishment Internal repression Civil war

10.

Level of economic drvcIopment Real income growth

11.

Size of State budget

17.

Influence of militaryindustrial complex

activity

:: Economic linkages

9.

1129

COC’\TRIES

Global

Regional alliance

3.

Adherence to .I global power bloc

7.

Regional war or inter-State hostility

8.

Foreign militsq

13.

Regional economic grouping

14.

Growth of foreign exchange availsbdity Influence of forelgn capital Influence of major aid donor

15.

aid

I 130

h’OKLD

DE\.ELOP\IE\-I

inequalities in Lvralth, income and opportunities for economic and social ndvancemrnt. and consequently may involve greater potential for conflict among social and other groups. The pro\vth of real income is also relevant. since if real income is stagnating. the resource constraint is likelv to place a limit on additional military espendituie In the absence of foreign military or financial aid. A related factor is the size of the government budget in relation to gross domestic product: in countries where the central government is relativrly strong in the sense that the share of oovernment expenditure in GDP is relativeI\ > large. the share of military expenditure in GDP is also likely to be relativelv high. As governments gain greater control o&r the disposal of the national product. the proportion of the total government budget devoted to the armed forces may tend to decline. A further factor, frequently mentioned in the literature. is the intluence of a domestic arms industry which. by a close alliance with political and bureaucratic interests. can develop effective persuasive power to influence decision-makers to agree to additional military expenditure. I lowever. the intluencr of the “military-indiistrial comples.” though possibly of importance in a few developing,countries. is much smaller in developing countries generally than it is in the larger industrialized countries. At the regional level, the principal influence has been. and remains. conflict. tension and war betucen neighboring countries. As already mentioned. over the period 1’945-76 there were. on Kende’s classification, 1X such wars involving developing countries, in six of which there was foreign participation. Since 1976. a further nine wars between developing countries have occurred (Sivard, 19S.3). h4any of these inter-State wars. however. have been closely related to civil wars in progress in one or other of the combatant nations. Examples (countries with civil war listed first) have been Ethiopia-Sudan, UgandaTanzania, Lebanon-Israel and Syria. Cambodi;IVietnam apd Cyprus-Turkey. It is indeed rare to find a “pure” civil war in the postwar period. especially if allowance is made for intervention in one form or another by one of the superpowers. It could be argued that the level of military expenditure is also likely to be influenced by whether or not a country is a member of a regional political or military alliance (though this is not likely to be a major factor since most developing countries are not involved in such alliances), or aspires to become a dominant regional power. Membership of one of the many regional economic groupings could also conceivably have some impact on military spending.

At the global Ie~el. the possible influence of invol\cmcnt in on? of the power blocs has already been mentIoned. Normally. such adherence i$ accompanied by military links. either directly in the form of equipment. training. supplies. etc.. or indirectly in the form of finance for addition> to the military establishment. or both. ?.lore sprcificall~ economic factors include the availability of foreign eschange. the potential influence of foreign capital. in the form of tran>national corporations. on the socioeconomic structures of host countries. and the potential influrncr of major aid donor governments on the domestic and foreign policies. including militark policies. of these countries. The relevance of foreign exchange. uhich derives from the need of all developing countries to purchase military equipment. particularly sophisticated equipment. from developed countries, \vas especially notable when oil-esporting countries in the hfiddle East began programs of rapid military expansion following the sharp rise in oil prices in 1973 and again in 197$79. Bv contrast, developing countries Lvith chronic balance-of-payments deficits GIII modernize or expand their military hardware only by restricting imports for civilian purposes, or bv obtaining such hardware on concessional terms from ;I major power. It is difficult to prejudge LI priori the influence, if any, of transnational corporations on military expenditure. To the extent that their operations lead to national disintegration, as some dependency theorists maintain (see Sunkel, 1973; Palma. 1978). the resultant increase in social divisiveness and social conflict could be expected to lead to greater internal repression of disadvantaged groups and. to that estent, to higher levels of military expenditure. On the other hand, transnationals are likely to conct‘ntratc their investments. ceterispnribus. in countries with IOU levels of political instability so that. to that extent, there is likely to be a negative relationship between the magnitude of foreign direct investment and the level of military expenditure (Frank. 19%)). It is equally difficult to prejudge the probable influence, if any, of a major aid donor government on the level of military expenditure of a developing country. In this case. much would depend on whether, as is often the case, the major aid donor was also the chief member of a global po\ver bloc, in which case heavy dependence on that country for both aid and arms might tend to be associated with a higher level of military expenditure than if both aid and arms were obtained from a varietv of sources. If. however. the dominant supplier of arms belonged to an opposing global power bloc from the

dominant supplier of aid. the host government could come under contlictinp pressures; this would not be a stable situation. and would presumably not last for very long. At attempt to distin@h the relative importance of the three levels of influence on military expenditure. as distinguished in Table I. by the use of cross-country regressions is described in a following section. Beforr turning to that. it seems useful to summarize briefly the results of previous quantitative studies of this issue.

One of the first attempts at an analysis of the determinants of military expenditure was made by Lotz (1970) as part ot a more general analysis of each of the main elements of government spending. Using data for the mid-1960s. Lotz calculated a cross-country regression equation for 37 developing countries. bvith military expenditure as a percentage of GNP a!,the dependent variable. The results (with R- = 0.366) showed a significant negative relationship with per capita income (in US dollars). and significant positive relationships with the proportion of population living in urban areas and with the total government budget as a percentage of GNP. Lotz explained the negative relationship with per capita income by suggestin? that there is a certain. absolute, technical minimum size for a modern military establishment, and that in lowincome countries military spending may have been forced up to counter potential conflicts with more wealthy countries. The proportion of the population living in urban areas was taken as a proxy for. a process of social change arising from a shift from agriculture or subsistence sectors to urban labor markets, while the share of the government budget in GNP was taken as an income constraint on spending for specific purposes. However, Lotz does point out that where high military expenditures are financed by high levels of foreign aid, the government budget/ GNP ratio does not represent a revenue constraint. It is interesting to note that while Lotz obtained acceptable results in terms of the goodness of fit for a cross-country regression, none of his significant independent variables related specifically to military activities. Moreover, even in the economic sphere, he included only about half of those potential influences on the level of military spending which were listed in Table 2. More recent analyses of military expenditure levels in developing countries have been reported

by Deger ( lY81) and Deger and Smith ( 19S3). In both cases. cross-country regressions for about 50 developing countries were computed with the share of military expenditure in GDP as one. among several. relevant dependent variables. the data being averages for ths period lYhc73. The Deger and Smith regression gave a relatively good fit (R’ = 0.7s). but a large part of the statistical explanation was provided by dummies for countries engaged in war and for oilexporting countries. A similar result was reported by Deger (1981). Again. in rrlatlon to the list in Table 2. these analvses covered only, a limited number of poteniially significant Influences. A more sophisticated approach to an analysis of the factors behind military spending in developing countries has been proposed by Deter and Sen (1983). who elaborate a mathemaiical welfare maximizing model based on the assumption that military expenditure in these countries is “principally determined by strategic considerations of security and threat.” An index of threat is constructed which “is related to regional conflicts with geographically localised strategic targets.” However, this basic assumption is itself open to question. since the primacy of regional conflict as a determinant of military expenditure needs first to be demonstrated. especially in the light of the discussion above. In any case, Deger and Sen do not attempt a quantitative analysis using their model. By far the greater number of quantitative studies over the past decade or so of the determinants of military expenditure have related to developed countries. Many of these focus on the global arms race, using models developed from that first elaborated by Richardson (1960). An important trend in this area since the late 1970s has been the attempt by a number of analysts to explain the military expenditures of developed countries by domestic factors rather than as reactions to external threat (see ,\loll and Luebbert, lYS0, for a recent revisit of the literature on this subject). Time series regressions for military spending by the United States. to take the most recent published example. show that such spending is closely related to cyclical shifts in the domestic economy, while being also to international political changes sensitive (Griffin Edal.. 19%). As the earlier discussion has indicated, there is also every reason to assume that in developing countries, too, both domestic and external influences are at work. (b) A qmntifurive An

attempt

has

three-level ana/ws

been

made to

apply

the

three-level distinctions set out m Table 2 to cross-country regressions for 83 developin: cnuntries. with separate regressions for the three regions of Africa. Asia and Latin America. The country data relate to annual averages for the years lY7&SO. which were the last three years for which the relevant statistics were readily available. The variables chosen to represent the items in Table 2 were as follo\vs (detailed data sources are given in the Appendix). h’atiorrnl orltl rqioml 1t~wl.s: Since the nature of the State. political instability. internal repression and the vested interests of the military are closely interconnected, it was decided to represent these concepts by a single variable. For this countries with civilian governments purpose, were given a zero score, while those under military control were scored 1, 2 or 3 according to whether their use of violence against the public was rated as “none.” “some” or ‘.frequently.” respectively.’ This is, admittedly, a crude indicator of the degree of domestic conflict, especially as it implicitly assumes that civilian governments do not repress their populations. This proxy variable also appears to be related more to the nature of the State than to the vested interests of the military, though there is likely to be some indirect relationship with the latter. It is of interest in this regard to note that of the 83 developing countries included in the full sample, 52 (or nearly two-thirds) had governments under military control, and of these, 35 (two-fifths of the sample) were countries in which “official use of violence against the public” was frequent (Sivard, 1983). As mentioned earlier, a substantial proportion of civil wars in developing countries have been connected with regional inter-State conflict, so that it seemed impracticable to draw a rigid distinction between the two. Consequently, a dummy variable was used, with countries involved in a regional war, a civil war, or both in the period 1973-80 being distinguished from other developing countries. Among the economic linkages listed in Table 2. the level of economic development is here represented by GDP per capita (measured in US dollars. log-transformed). Though this is admittedly a crude and imperfect measure of the level of economic development, it was thought to be adequate as a control variable. Preliminary tests showed that the degree of urbanization was not significantly related to the level of military expenditure in the present sample, a result which contradicts Lotz’s finding for this variable, and may reflect a third relationship between urbanization and instability. Real income growth is represented by the annual average percentage

growth in real GDP over the period lY7JMO. while the share of central SoLernment espenditurc on GDP relates to the akerase of the >c;lrb 197,~#I.’ The influence of the “militaryindustrial complex.’ is not included In the analvsis. Total population (not lkted in Table -3) hits been included as an additional control variable. Global lcrel: Of the economic linkages at the global level. the foreign eschanps constraint is represented by the grokvth of foreign exchange availabilities (exports of goods and services. aid and the net inflow of long-term capital) deflated by the import price index. used in lo?-transform. over the period lY72-7.3 (average) to 197%SO (average). A separate variable for the change over this period in the ratio of aid receipts to GDP has also been included. The potential influence of foreign direct investment in a host developin, ~7country \vas measured in several complementnr): \vays. First. estimates were made of the proportion of the total stock of fixed assets (escluding the government sector and housing) which was under foreign control. As indicated earlier. different vie\vs of the role of foreign penetration of the economies of developing countries would lead to oppobing expectations of the relationship between the degree of foreign penetration and the size of the military establishment, and hence of the military burden. Second, the relative change in the stock of foreign capital assets. from 1073 to 1980. was measured to ascertain whether there was an\ significant association between changes in foreign okvnership an d changes in the host country’s military effort. Third, the degree to which the foreign capital stock is concentrated b! the controlling developed country was rspresented by a five-point score, depending on the proportion of subsidiary and affiliated entrrprises of transnational corporations of the principal developed country involved. This concentration variable is relevant to testing the hypothesis that countries in which foreign capital investment comes mainlv from a single dominant investing country are more susceptible to that country’s influence on its development policies. including its military policies. than are countries having a diversified foreign investment structure. Finally, the influence of adherence to a global military aid, \vas power bloc, and of foreign represented by a single variable, r*i:. a five-point score for the proportion of arms transfers coming from the principal supplying country. High concentration of arms transfers appears to be significantly related to adherence to one of the global power blocs, and it is also positively associated with military aid levels. In addition, some experiments were made to see whether a

\IILIT.-\RY

ESPENDITURES

strategic link with the United States had different implications for the level of military expenditure than did a strategic link with the Soviet Union.

(c)

lXe regressiorl rrsulfs

A Lvord of caution is first necessary about the reliability of the data on military expenditure. In many developing countries. published military cspenditure data are deficient to a greater or lesser extent. In some cases. the understatement is designed to mislead potential enemies but. more generally. governments may wish to minimize the apparent military burden on the economy.s Since there is no reason to assume that different governments understate their military expenditures by a similar proportion, there is an inevitable, possibly large, margin of error in any statistical analysis. In addition, the military expenditure figures for many individual countries can be substantially different in the two main sources of statistical information, the publications of the Stockholm International Peace Research Institute (SIPRI) and of the US Arms Control and Disarmament Agency (ACDA). The present analysis is based on ACDA data, but additional regressions for the full sample based on SIPRI figures were also computed, and yielded broadly similar results. Nonetheless, the results should not be taken as a definitive demonstration of the influence of particular factors on the military cxpcnditure levels. but rather as suggestive, in a number of cases strongly so. The military burden has been measured in two ways, first as the proportion of military expenditure in GDP (to indicate the diversion of national resources to the military sector), and second as the share of the military budget in the total expenditure of the central government (to indicate the results of government resource allocation decisions). Table 3 sets out the results of three separate regressions for each of these definitions of the military burden taken as the dependent variable. For the share of military spending in GDP, each of the regression equations accounted for about two-thirds of the variance, with all the different dimensions (military, economic, political) and levels (national/regional and global) making significant contributions to the explanation. A comparison of f-values indicates that differences in the share of the government budget in GDP represent the most important single factor associated with differences in the ratio of military expenditure to GDP. Differences of 10% in the former ratio tend to be

IN DE\.ELOPING

COL’NTRIES

1133

associated with differences of some 2”& in the latter. It is of some interest to note that income levels per capita showed no significant relationship to military espenditure/GDP ratios, a result which is contrary to the finding by Lotz. quoted earlier. The existence of war or civil war situations has a marked effect on the size of the military burden, as was to be expected. Countries in such situations tend to have higher military spendin& GDP proportions (some lE-29’~ percentage points) and higher military spendinggovernment expenditure proportions (some 6E-7’~ percentage points) than have other developing countries. The magnitude of these differences can be gauged from the fact that the corresponding mean proportions for all 53 developing countries were 3.9 and 13.7%. respectively, for the two measures of military burden. The control of government by the military. and particularly where military rule is associated with frequent use of violence against the public. is also associated, as expected, with significantly higher levels of military expenditure. All three regressions yield closely similar, and highly significant, coefficients for this variable. indicating that, on average, military regimes using frequent violence have military expenditure proportions of GDP about 2%) higher than have civilian regimes, after allowing for differences in all the other variables in the regressions. For the military component of the central government budget, the’ difference between these two types of regime is 44ti%. Turning now to the external economic variables, it seems evident that foreign exchange availability acts as an important constraint, as expected, on the ability to finance military expansion programs. Foreign capital penetration, however. is negatively related to the military burden. which supports the hypothesis that transnationals prefer to invest in countries with relatively low levels of instability (and of military expenditure). Though this result does not necessarily invalidate the dependency school argument mentioned earlier in regard to particular country situations, it would seem that the opposite view is more generally applicable. Finally, the variable used to represent adherence to a global political/strategic alliance, i.e. the degree of concentration of foreign arms suppliers, was found to be highly significant. Countries depending wholly or mainly on only one external supplier of military equipment have, on average, a proportion of military expenditure to GDP which is some 2% higher than countries with widely diversified sources of s~pply.~ The corresponding difference for the proportion of the military component of the central govern-

1. .\/ilirqv acrir,iy

~1.Inter-stats

war or

civil war b. blilitary governmcntiuse of violence 2.

Irrrrrnnl

growth rate

c. Central governrncnt expenditure as ratio of GDP 3.

Extcwd ecowmic litlknge 3. Growth of foreign

exchange availability b. Foreign direct investment: (i) Ratio to total capital stock (ii) Foreign investor concentration 4.

1.56f

(l.YO) 0.61*

(2.63)

(1.76)

n.s. n.s.

n.s. 0.16: (0.71) 0.17’ (5.97)

I .74$ (‘.OO) 0.66’ (2.76)

7.6s’ (3.40) 1.33:

n.s. n.s.

n.3. n.5.

0.3

n...

0.17’ (5.63)

n.s.

(1.11) n.s.

n>

2.-w* (3.49)

J.73$ (2.44)

(2.16)

ecorlorrlic

linkayr ;1. GDP per capita b. GDP

2.43’ (7.SY) 0.65*

0.3_1* (7. IO)

2.7’)’ (4.06)

-1.15’ (-3.59) I1.S.

-0.62; (-2.12) 11.5.

-0.79$ (-X17) 11.5.

-2.jY’ (-2.Y3) -1.3x (-1.46)

n.5.

- 1.37t (-1.71) 11.5.

,I

\.

-I..” (-1-J-j -1.15 (-1.1:)

~.rlenlnl politicdl slrategic ullirmw Arms supplier concentration

Ii’

D-W ,I

‘Dcnotcs tDcnotss iDenotes Figures in

0.64’ (2.M)

2.4s’ (4.12)

3.45” (2.52)

3.33; (2.34)

-

0.663 2.07 s3

0.673

0.517

I .ss 72

I .80

0.63’ (1.X2)

0.65 1 1.99 72

l.Y-1’ (3.16)

2.23’ (3.51)

4.x0

5.91 (1.19)

(1.6-l)

72

0.476 I .Y8 x3

0.515

I .s73

significance: ut the 1% Icvcl. significance 31 the 10% level significance at the 5% level. brackets arc ~-values.

ment budget is 6-7’/2%. These differences strongly suggest that adherence to a global power bloc is indeed likely - as suggested earlier - to lead to pressures on governments to expand their military programs. In this connection, some further analysis was attempted to ascertain whether any significant difference existed between adherence to the Western bloc and adherence to the Eastern one. However, neither of the dummy variables used to distinguish the various developing countries.involved proved significant for the full sample regressions.

(d) Regional armlysis The variables described above ~c’re also used in separate regressions for Africa, Asia and Latin America. Tables 4 and 5 give the results for the proportions of military expenditure to GDP and to central government expenditure. respectively. In both cases, the goodness of fit is not consistently high, while there are marked differences among the regions in the relative importance of different significant variables. As regards the military spending’GDP propor-

XIILITARY Table

4. Regression

EXPENDITURES coefjicwnts

for

IN DE\‘ELOPING

militur,v e.rpmhure

Africa Eq.1 1. Milittrry actirit\ a. Inter-State war or civil war b. Military government/use of violence 2. I~ilrrrial ecow,rr~c linkage a. GDP per capita

2.-13 (1.63) n.s.

l..iOll

Eq.’

Eq.3

ratio to GDP: Asia* Eq.4

Eq.5

1.30% (Z.Sl) 0.59 (1.25)

1.15 (1.13) 0.993 (3.26)

0.75 (1.47)

1.13 (0.68) 0.71 (1.17)

n.s.

“.S.

“.S.

“.S.

COUNTRIES

“.S.

(2.47) b. GDP growth

rate

c. Central government expenditure as ratio of GDP d. Total population 3.

4.

“.S.

“S. -

0.3s (0.90)

0.228 (5.45) O.YOll (2.45)

O.-l7 (2.25) 0.23R (4.03) -0.3s (-0.92)

0.40~ (1.83) 0.29s (5.5s) -0.50 (-1.15)

“.S.

1135

Rrgionul

anul,vsis

Latin Eq.6

I.hSII (2.17) “.S.

-0.37 (-1.02) “.S.

.Amrrica+ Eq.7:

O.Y5 (1.-w) n.s

“.S. -0. IS? (-1.77)

0.234 (1.79)

“.S.

“.S.

“.S.

“.S.

-0.23 (-1.3-t)

3.8-Q (2.79)

“.S.

“.S.

n.s.

1.20 (1.63) “.S.

1.9711 (2.58) 0.53 (1.56)

E.~temal economic linkage a. Growth of foreign exchange availability b. Foreign direct investment (i) Change in foreign capital stock (ii) Foreign investor concentration c. Change in ratio of aid to GDP

2.0311 (2.58)

“.S.

“.S.

“.S.

“.S.

“.S.

“.S.

E.rterml politicall strntegic allimce Arms supplier concentration

0.51 (1.45)

“.S.

0.73 (1.37)

0.91 (1.59)

1.518 (2.86)

“.s.

fl.S.

3.16’; (1.79)

-

-

-

-

0.815 2.21 24

0.7x-l 2.23 2-l

0.875 1.57 I9

0.197 2.51 23

0.291 2.29 20

5. Regional factor Middle East R’ D-W n

ns.

“.S.

n.s.

tl.S.

n.s.

“.S.

0. 167 1.97 38

I 1.6-l

0.47 38

ll.S.

-1.66ij (-2.5s)

tl.S.

-1.411 (-1.97)

-0.75 (-0.96)

‘Including the Middle East and Pacific. ;Including the Caribbean. $Excluding Chile. Costa Rica and Panama BDenotes significance at the 1% level. //Denotes significance at the 5% level. IDenotes significance at the 10% level. Figures in brackets are t-values.

the regressions for the Asian region each a relatively high proportion of explained variance, whether or not a Middle East dummy was included. In all three equations, the dominant factor was the relative size of the government budget in GDP. The growth in foreign exchange availability was an important constraint, while tion.

foreign capital - measured in this case by the concentration variable - was negatively associated with the military burden, as was the case for the full sample. The war/civil war situation variable was highly significant, but only when the foreign exchange variable, with a reduced number of countries, was included.

1136

WORLD

DEVELOP\lES-I

Africa Eq.l 1. MilirrrrJcrcririfj 8. Inter-State war or civil war b. hlilitory governmentiusr

13.62$ (3.S-1) n.s.

of violence 2.

lrlfrrrlrrl economic linkage it. GDP growth rate b. Central government expenditure as ratio of GDP c. Total population

3.

4.

5.

“.S.

1.34 (1.36)

1.85 (1.09)

Exrt~rnal poiilicull slrarqic olliarm Arms supplier concentration

I.7tir/ (2.64)

R’ D-W n

I.SS (1.64)

“.S.

(4.67) I .6J!i

“.S.

-0.79 (-0.84)

-

“.S.

- 1.27’

n.s.

(-2.35) -0.3sy

lo.oYg (4. IO)

“.S.

I1.S.

I1.S.

n.s.

“.S.

0.385 1.54 38

“.S.

n.s.

n.s.

n.s.

-3.5911 (-2.46) I1.S.

2.7711 (2.28)

-2.20 (-1.47) “.S.

4.325 (4.3.5)

8.57s (2.97) 0.687 2.33 24

“.S.

(1x3)

(-2.67)

Exrernol t~corwmic lirkagr B. Growth of foreign exchange availability b. Foreign direct investment (i) Ratio to total capital stock (ii) Change in foreign capital stock (iii) Foreign investor concentration c. Change in ratio of aid to GDP

Rt~giorwl fuuctor Middle East

Eq.3

n.s.

1.X$ (2X6) “.s.

“.b.

Latin hmerica+ Eq.ii ELl.4

Asia‘ Eq.3

0.842 1.52 19

- 1.X’; (-2.1s) -O.-W (-3.5Oj

- 1.24 (-1.34)

n.s.

-

1.3s (OSO) 7.051 (2.20) “.S.

“.s. 5.61 (1.30) “.S.

11.5.

“.s.

“.S.

1.18 (0.95)

-

-

0.400 2.35 23

0.381 1.94 20

‘Including the Middle East and Pacific. tIncluding the Caribbean. *Excluding Chile, Costa Rica and Panama. ODenotes significance at the 1% level. [[Denotes significance at the 10% level. IDenotes significance at the 5% level. Figures in brackets are r-values.

The regressions were much less satisfactory for the two other regions. For Africa, the preferred regression (Eq.2) again showed the government budget/GDP ratio as the single most important variable, followed by that for military governmentiuse of violence. The coefficient on this latter variable is 50% higher than that for the

full sample, indicating that the differences among African countries in this measure of the military burden are significantly greater. as a result of military rule and the use of official violence, than they are in the other regions. Another result of some interest is that when the government budget/GDP ratio is excluded, the change in the

aid/GDP ratio becomes statistically significant (Eq. 1). implying some leakage of economic aid to military expenditure via the Tovernment budget. For Latin America. however. the regressions throw little lipht on the underlying reasons for country differences in the military spendin$CiDP ratio. For the preferred result (Eq.6). the most significant variable is the change in the foreign capital stock (from 1973 to 197s). though in this case the relationship is positive. In other words, countries in the Latin American region having hiph levels of military spending also tend to be the countries attracting the hiphest proportionate protvth in transnational investment. It may well be that the dependency school hypothesis. which originated in Latin America. does apply within that region. even thouph it does not if the Third World is taken as a whole. Turning to the military share of the government budget. the best regression fits were again for the Aiian region. With the inclusion of the foreign exchange constraint (Table 5, Eq.3). over SO’% of the variance in the dependent variable W;IS accounted for. The esistence of war or civil and the concentration of arms war situations. suppliers. were the two principal associated factors. Militarv control of the government. combined with the use of violence, was also relevant but the significance of the coefficient W;IS not high. As for the full sample. the foreign investment concentration was negatively correlated with the military share of the government budget. The corresponding regression results for Africa and Latin America were less satisfactory than for Asia. For Africa. the existence or othcrtvise of war or civil war situations was the dominant factor explaining inter-country variations in the military share of the national budget, though that share was also significantly associated with the degree of concentration of arms suppliers. For Latin America. the share was negatively related to the growth rate of GDP ancl to the relative importance of the government budget in GDP. For the full sample of 23 countries. increments in tran5national corporations’ direct investments and significantly. related to the are positively, military component of the nationnl budget, but this relationship loses significance when three “outliers” (Chile. Panama and Costa Rica) are excluded (Eq.5). Tlte slrprrporvcr krlk. As mentioned earlier, an political/ attempt was made to distinguish strategic links with the United States from those with the Soviet Union.This was done by assigning a unit dummy, in each case, to countries providing military bases or facilities for military prrson-

nel to the superpower concerned. with zero dummies for other countrks. This procedure yielded statistically significant coefficients for Afrka and Asia. but not for Latin America (and not for the full sample. as alread! stated). For Africa, the coefficient for thz United States was not sipnificant. but for the Soviet link. the coefficient was significant and positive. indicating that. controlling for the other vnriables. African countries allied to the Soviet Union tended to have ;I military spendindGDP proportion some Z-3 percrntz+e points higher For the Asian than other African countries. region. the coefficients for both the superpowers were statisticnllv significant. but in this case. countries allied to the United States had. on average, a substantially higher proportion of militarv spending in GDP than did those Asian countries allied to the Soviet Union (the difference being about 45’~ percentage points).” These results must, of course. be interpreted with considerable caution, especially since it is not possible to compare with the corresponding counterfactual situations. 1. CONCLUSIONS The differences among developing countries in the relative size of their military burdens thus appear to reflect ;I complex of factors domestic, regional and global-which are not easy to disentangle. and which no doubt vary in emphasis from country to country. Wars or tensions with neighboring developing countries are evidently only one clement in this complcs. though they may become predominant for particular countries at certain times. Domestic factors. particularly the need perceived by ruling klites to repress internal opposition groups, and including relations with the external factors. global power blocs and the avail~~bility of foreign exchanpe to purchase arms from abroad. also appear to be major determinants of government decisions in regard to military expenditures. While all these factors were also found to be significantly associated with the share of military expenditure in GDP. the most important single explanatory variable in this case was found to be the share of the central government budget in GDP. Investment in develqping countries by transnational corporations of developed counwould seem not to be a tries. by contrast. determinant of military espenditure. but is rather related to the degree of political and economic stability perceived (or projected). which is itself inversely related. possibly in a complex way 2s suggested bv Terre11 (1971). to military rspenditure levels.’

It bhould be possible. in principle. to integrate the results of the analysis of the determinants of military expenditure \\ith those relating to the latter’s impact on the rate of rcunomic growth as summarized in Section 1. For esample. questions arise such as what has been the economic cost. in terms of lost output. of having ;I military govrrnmrnt rather than a civ[lian one. or of adherence to a plobal po\vsr bloc? The mean effect of either of these t\vo situations has been shown in Section 3 to have been in the repion of an increase of 7 percentage points in the military share of GDP. This result ~voulci need to br combined \vith a coefficient for the effect of changes in the military share of GDP on the GDP growth rate to answer the quation posed. There are. however. danptxs in combining the regression results of Section 3. which relate to ;I very short period of time, with any of those summarized in Table I. v. hich relate to different periods in each of which the magnitude of the relevant parameters may well bc: significantly diffcrcnt. Moreover, in view of the wide range of estimates in Table I. such a calculation would have ;I vcrg wide margin of error. If. for esamplc. the Dcgcr and Smith (I%.?) estimate is used. then it could be concludcd that countries with military governments using violence frccluently in the late 1’970s had. growth rate some 0.4 0 n average, ;I GDP

percentage point3 lower, crrerk ptrrih~cs. than the) \rould have had with civilIan governments. If such miIltCtry rt’gime \tere all adherents of ;1 dohal pov,\c’r bloc. the GDP growth rate ~vuulcl c have been lower, on average. by about 0.S percentage points. On the other hand. if the Faini i’[ ~rl. ( 1W-l) estimate is used, the reduction, in the GDP growth corresponding rate uould be 0.1-0.2 and ().7%).-l percentage points. respectively. The estimated prouth rate rrcluction would be even >m;lller if the coefficient derived by the present author5 (as eiven in Table I) \vcre used. These purely illustrative cnlculations should not, of courbe. be taken as a realistic estimatr of the likely result of the transition from a military to ;I civilian repime. They are. rather. indicative of ;I useful apenda for further rcsexch. The most promising avenue for such research would st‘t‘ni to bc to unrlt‘rtake longitudinal studit2s of indiviclu;il drveloping countries suhjcct. for esnniple, to military rqimes or to external pressures from ;I slobal power bloc. An analvsis of the changing shares of the military and budgets of civiljan sectors in government devt2loping countric‘s in the current period of estremt‘ financial stringency would be pxticularly relrvant to ;I further understanding of the complcs relationship bctwccn military expenditure and economic growth.

XIILIT.-4R\I~

EZPENDITL‘RES

IS

DE\‘ELOi’I~;(i

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Lotz. J. R.. “Patterns of qvcrnment spcndlng III drvclopin~ countries.” T/f? .\/~rnclrr~-rcr &/rod. \‘ol. 3s. No. 2 (lY7ll). Luttwak, E.. C.oql tl‘ccclr (Lundun: .Allcn Ldnc. lY6S). hloll. K. D.. and G. hl. Lwhbcrt. “Arms r;fct’ and mtlitary expenditure modrl5.” /oftrmd qf‘ Corf]licr Rt,solrtriou. Vol. 21. 50. I (IYStJ). K’ilbe. 0.. “hlilitarv cxpcnJlturc\ and idu~trli~lization in Africa.” lotrr,;cd oj Ecor~orwc /rsws, \‘ol. 17, No. ’ (IYS3). ‘.Depcndcnc): A formal theory of Pilrn‘l. G.. undcrdevclopmtnt or a methodology for the analysis of concrete 5ltuationa of un~~rcl~~~loprll~nt’!” LVorltl D~~dopmw’, Vol. 6, No. 7-S (lY7S). Richardzvn. L.. .-Irw tr,ld tf~.\~~~.urrr,~(Chic.y: Ouadrangk. IYhO). and the di\trihuRuhinwn. Ii.. “The \vorld-economy tion ol income uithin stata: A crownittional study,” .-\mcricm Sociolo~icd Rn,irn. Vo. -I I t lY7h). Sivard, R. L.. 1Vorttl ,\tilirrrry md Socitrl E.\,wudirfrres. D.C.: U’orld Prioritle. lYS3). IYS3 (Washington. espcnditure and cdpitali5m.” Smith. R.. “hlilitary Crrmhritlgc Journtrl (I/‘ Ecotromics. Vol. I. No. I (lY77). espcnditurc and in\etmsnt in Smith, R.. “hlilitary OECD countries. IYM-lY73.” Journd oj- Cov!pf~r~~ IilY, f3wrlortlit~s. Vol. 4 ( IYSO). for military csp
DATA Irrlrr-.Srtrfc* war or ci\,rl ~wr: Sivard ( IYS.3): l lartman, 1‘. and J. hditchcll. A World Arlr., 01‘ Miliftrry ffisrory. IY-l.i-1YS-l (London: LL’C Cooper with Scckcr & Warbur.g. IYS-!).

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SOURCES capital stock, b;~aed on cstrapolatwn ofcrua-country rcgrcsbion for OECD countrie or current rcplxcmcnt VIIIUC of capital stock (excluding howing and government sector) on sncr:v consumption. Value

(Paris: OECrj). transformed.

xljustd

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vaIu;iticIn.

Log:

c’orpord&.s in Worltf Dc,~,t,lot,,rft,t~r: A Third Survq (New York: Unit& Nation>. lYS3). Scale value assigncd as follows, dcpcnding on percentage of principal investing country in total number of subsidi3ries/affili~ltes of transnational corporations:

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