Defense and Welfare Under Rivalry

Two small countries facing a constant probability of war with each other import arms for consumption goods from the rest of the world. The defense good, produced by combining arms and army, is a public good. The reaction curve depicting the optimal supply of the defense good turns out to be backward-bending. Nevertheless, at least one of the reaction curves is positively sloped at the unique Nash equilibrium. Several comparative statics results are derived. For example, if one country's reaction curve is negatively sloped, military aid to the rival leads to a decline in its optimal supply of the defense good.     

Corruption and military spending

Anecdotal evidence relates corruption with high levels of military spending. This paper tests empirically whether such a relationship exists. The empirical analysis is based on data from four different sources for up to 120 countries during 1985–1998. The association between military spending and corruption is investigated by using cross-section and panel regression techniques. The results suggest that corruption is associated with higher military spending as a share of both GDP and total government spending, as well as with arms procurement in relation to GDP and total government spending. The results can be interpreted as evidence that defense spending may be used as a component of an indicator of the quality of governance.     

THE FUTURE OF THE U.S. DEFENSE INDUSTRY

Defense contractors in the United States face a painful choice between downsizing or investing in new high-risk commercial ventures. Past experience reveals numerous failed efforts to penetrate commercial markets and few, if any, successes.
The capabilities required to succeed in civilian business are fundamentally different from those needed to design and produce weapon systems. Defense firms and defense divisions of diversified corporations lack adequate knowledge of commercial products, production methods, advertising and distribution, financial approaches, and customer demand.
Given the outlook for a sustained decline in U.S. military spending, the author advises companies catering to military markets to cut their costs by reducing excess capacity. Smaller but more competitive positions can be achieved through restructuring, mergers, sales of assets, and, if necessary, closing down unneeded facilities. Firms that ignore the pleas for "conversion" and do not dissipate their assets in civilian markets alien to them stand the best chance of surviving during a period of reduced military demand.     

Conflict, defense spending, and the number of nations

This paper provides a formal model of endogenous border formation and choice of defense spending in a world with international conflict. We examine both the case of democratic governments and of dictatorships. The model is consistent with three observations. First, breakup of countries should follow a reduction in the likelihood of international conflicts. Second, the number of regional conflicts between smaller countries may increase as a result of the breakup of larger countries. Third, the size of the peace dividend (the reduction in defense spending in a more peaceful world) is limited by the process of country breakup.     

军民融合型科技工业协同创新体系构建研究

军民融合型科技工业协同创新体系是国防科技工业和国家高科技产业发展的基础与内在动力。基于国际比较视角,从激励机制、约束机制及法律政策保障等方面比较美日德等发达国军民融合型协同创新体系发展情况,构建我国军民融合型科技工业协同创新体系,探讨“国防需求拉动”、“民用需求拉动”和“科学研究推动”3种动力机制下军民融合型科技工业协同创新体系运行模式。     

MILITARY SPENDING,THREATS AND STOCHASTIC GROWTH

This paper analyses the impact of home military spending and foreign military threat on economic growth in a stochastic endogenous growth model involving the supply‐side and demand‐side effects produced by military spending. The paper states that an increase in home military spending affects economic growth through three channels, including the crowding‐out effect, the spin‐off effect, and the resource mobilization effect. The net effect which depends on these three channels is ambiguous. Hence, we demonstrate that there exists an optimal defence burden that maximizes the economic growth rate. Furthermore, the optimal defence burden depends on the degree of risk preference. Namely, the optimal defence burden of the risk‐loving agent is more than that of the risk‐neutral agent, and in turn is more than that of the risk‐averse agent. At the same time, we prove that the relationship between the volatility in military spending and economic growth also depends on the degree of risk preference. In addition, we show that greater volatility in foreign military spending leads to a decrease in home aggregate consumption, and hence speeds up economic growth in the home country.     

Explaining destinations and volumes of international arms transfers: A novel network Heckman selection model

What determines the volumes of international weapon transfers? And why do countries establish such arms trading relationships in the first place? We propose an innovative statistical strategy that builds on the gravity approach and combines a Heckman model with a network analysis. This allows us, for the first time, to analyze the impact of network structures on both the extensive and the intensive margins of the international arms trade simultaneously. We argue that the structure of the arms transfer network conveys important information for exporting and importing countries. Therefore, past topological properties of the trade network play a central role in its future evolution. Using data on the trade of major conventional weapons between 1955 and 2018, our estimation results and out-of-sample predictions show that network structures have considerable explanatory power with respect to the creation of trade links. They are far less relevant for the explanation of trade volumes, which are mainly determined by demand factors.     

分权体制下的民主参与、政府响应程度和公共品供需偏差

文章考察了当前背景下政府对地方民众公共品需求偏好的响应能力,利用1998～2008年期间的公共支出样本值测算了中国地方公共支出偏差指数,并引入不同选区人大代表指标作为民主参与的工具变量,以此体现政府响应能力。实证结果发现,财政分权、民主参与和公共品供需偏差三个变量之间存在着显著的内生关联;分权体制导致了政府公共品供给扭曲,而民主参与则部分抵消了公共品供需偏差。     

石油行业上市公司财务绩效综合评价研究

石油是一种不可再生的优质基础能源,其供应量的大小不仅关系到国家经济社会的发展和人民生活的质量,而且对国防安全也起到了重要的作用.由于石油行业上市公司在石油产品供应中起着重要的作用,是国家石油有效供应的微观主体,因此,如何有效地衡量石油行业上市公司整体运营绩效对于准确把握国家石油供应能力有着重要的意义.基于此,石油行业上市公司在石油产品供应中所起的作用,本文构建了石油行业上市公司财务评价指标体系,并运用因子分析模型对我国13家石油行业上市公司2010年的财务绩效进行了综合评价,得出了各上市公司财务绩效的综合排序,并从股本扩张能力、偿债能力、盈利能力、资产管理能力和成长能力五个方面探讨了其影响因素,为各石油行业上市公司财务业绩的改进及石油的可特续供应提供了科学的决策依据和方向.     

Short- and long-term relation between economic development and government spending: the role of quality of institutions

ABSTRACT

This paper tests the Wagner’s assumption of the one-sided directional flow moving from economic growth to public spending considering an international database over the 1996–2012 period. By using indicators on the level of country control of corruption, government effectiveness, political stability, rule of law, regulatory quality and voice and accountability, the paper analyses the economic performance-public spending nexus controlling for the quality of the institutions. The empirical evidence supports the existence of the Wagner’s law, showing that, in the short-run, public spending positively reacts to a positive shock in national income, with a lower magnitude for democratic countries. In the long run, the error-correction model shows the convergence between public spending and national output occurring less quickly for non-democratic, low-income and to a smaller extent for non-OECD countries. Institutional quality, such as effort in controlling corruption and the presence of regulations that permit and promote private sector development, may help reducing the amount of per capita public spending and making it more productive. Higher expenses in compositional amenities such as public services for the elderly may explain why public spending per capita will increase the most in economies with a higher share of the population that need healthcare facilities.     

Experiences of high-growth technology firms in Malaysia and New Zealand

How do technology firms experience high growth and the support available from governments? This qualitative study explores the experiences of high-growth technology-based firms in Malaysia and New Zealand. Case studies were developed for eight high-growth companies in the information and communication technology sectors of each country. The countries differ in national cultures and the forms of government support. There were no marked country differences in growth drivers. Growth was driven by innovation and flexibility within business-to-business sales relationships. These firms faced four obstacles: intense competition; liabilities of smallness; limited human capital; and funding ability. Malaysia offers broader mainstream support with favourable tax treatment of R&;D related expenditure. In contrast, New Zealand’s has been criticised for a highly targeted approach, although this is now broadening. Both countries appear to be converging on a hybrid approach combining mainstream and targeted support for growth businesses.     

A study on the military alliance of South Korea–United States with the existence of threat from North Korea: a public good demand approach

The military alliance between South Korea and the USA is examined in the context of the North Korean threat. The findings are as follows: First, South Korea is more sensitive to the North Korean threat than the USA. Second, defense goods are affected more by national income and own price than by the North Korean threat. Third, the spill-in elasticity of demand for defense goods in South Korea is increasing in absolute value. The policy implications are that South Korea needs to strengthen the military alliance with the USA and to put emphasis on national income growth in defense budget planning. We would like to thank two anonymous referees for their helpful comments. This research was supported by Korea National Defense University and Hankuk University of Foreign Studies Research Fund.     

Competing-destinations gravity model applied to trade in intermediate goods

The competing-destinations formulation of the gravity model ensues from the fact that unlike the classic version, this approach explicitly acknowledges the interdependence of the flows between a set of alternative countries. This article applies the competing-destinations gravity model to the analysis of trade in intermediate goods. The results of the model were then tested empirically with an international input–output data set and using the Poisson pseudo-maximum-likelihood estimator. The empirical results suggest that the analytical model can explain trade in intermediate goods. Indeed, as predicted, import of intermediate goods is increasing in the importing country’s demand for inputs, in the competitiveness of the exporting country, and decreasing in distance and competition posed by alternative countries.     

EXPLORING POTENTIAL ARMS RACES

Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat.     

‘GUNS OR BUTTER?’ REVISITED: ROBUSTNESS AND NONLINEARITY ISSUES IN THE DEFENSE–GROWTH NEXUS

The relationship between military expenditure and growth is studied taking into account potential nonlinearities and robustness issues in the specification of the econometric models used. Using cross‐country growth regressions and the widely used Feder–Ram model, the partial correlation between defense spending and economic growth appears robust and significantly negative only for countries with a relatively low military expenditure ratio. While the externality effect appears positive in this subgroup of countries, the overall effect turns negative due to the size effect of the military sector.     

提高城市公共品供给效率的研究与探讨

随着时代的进步,城市公共品的供给已经成为衡量一个城市甚至是一个国家文明及进步程度的关键因素.本文首先对城市公共品进行了界定,分析了现有城市公共品的主要供给模式.然后针对当前我国城市公共品供给存在的主要问题:政府和公共部门的过度干预控制,而私人部门或是第三部门在城市公共品的供给过程中参与程度却比较低,整体供给效率不高等,进一步剖析其原因.最后指出为了提高我国城市公共品的供给效率,应继续推进并不断地深化城市公共品的供给市场化改革思路,进行配套地改革,建立起多样化的投融资模式;进一步探求多样化的公共品供给模式,以地方政府和民间资本为城市公共品的有效供给者;建立和规范规制机构,建立健全补偿机制和供给机制;转变政府的职能角色,由“划桨”向“掌舵”进行转变,树立起服务理念;同时还要提高市民享有城市公共品的权利意识.     

Revisit causal nexus between military spending and debt: A panel causality test

This study revisits the causal relationship between military spending and debt burden in 11 OECD countries via a panel causality analysis that accounts for both cross-sectional dependence and heterogeneity across countries. Our empirical results indicate unidirectional causality from military spending to debt burden for Japan, Portugal, and the US; one-way causality from debt burden to military spending for both Canada and the UK; bidirectional causality for Spain; and for the rest of countries, we do not find any relationship between military spending and debt burden. The empirical evidence does not provide consistent results regarding the causal relationship between military spending and debt burden in these 11 OECD countries.     

Mundell in 3D, synchronization of supply and demand shocks among sectors not countries, with application to CEECs

We follow recent Optimum Currency Area empirical literature and investigate the correlation of supply and demand shocks between the individual new EU member countries and the ‘EU-core’. Treating the whole economy as one sector this is a standard exercise based on Mundell’s original insight that monetary unification can be welfare improving if (among other things) two or more countries contemplating unification face similar economic disturbances. However, treating the economy of each country as a single sector precludes gaining further insights from the empirical exercise. For this purpose, we propose a novel methodology which treats the economy of each country as a collection of three distinct sectors. This allows us to go beyond the standard results usually presented in the form of international correlation of supply and demand shocks. The methodology combines two pieces of information about each sector in a given economy. The first is the international correlation of sector-specific supply and demand shocks. This information is valuable in itself from the economic policy perspective, as it identifies the most and least internationally synchronized sectors, that is, the sectors that are most and least likely to benefit from monetary unification. The second piece of information is the sector-specific weights used for aggregation across sectors in a given country. While interesting in itself, when combined with the first this piece of information points to sectors that are more and less responsible for the final result one obtains from the empirical exercise. The international correlation of supply and demand shocks is a result common to the standard methodology and our methodology, so the latter can also be seen as a robustness check of the former.     

基于RIMS Ⅱ的国防支出区域经济效应分析——以美国圣迭戈县为例

国防支出对区域经济影响的主要分析工具之一是投入产出分析技术。本文在RIMS Ⅱ(Regional Input-Output Mod-eling System,区域投入产出模型化系统)基础上,讨论了区域投入产出分析的主要乘数模型:产出乘数、就业乘数和收入乘数。将乘数模型应用于国防支出的区域经济效应研究,我们发现,国防支出通过驻地军事基地和装备采购支出对区域经济发展的影响是显著的。由于国防支出由中央政府支付,经济区域内国防支出的流入意味着为区域经济注入了必要的生产发展资金,推动经济区域内循环往复的生产、消费、税收和就业。同时,不同类型的国防支出流入在区域经济内发挥的经济效应是不同的。以生产武器装备,承接国防合同为主而流入大量国防采购资金、国防R&D资金的地区,显然要比经济区内单纯驻有军事基地的地区有更高的乘数效应,国防支出对区域经济的产出、收入和就业的经济效应更为明显。     

Supply shocks and the interdependence of macroeconomic stability under flexible exchange rates

This paper analyzes the effects of a change in the monetary policy of a large economy on the macroeconomic stability of a small open economy with high dependence on imported intermediate goods. The analysis is carried out using the Taylor framework where the money supply rule is specified by the degree of monetary accommodation of price shocks. A supply shock to the large country is transmitted as both demand and supply shocks to the small country. A shift toward less monetary accommodation by the large country is shown to increase both price and output instability in the small country through the supply side linkage, while it may enhance price or output stability through the demand side linkage. Simulation results for Germany and Japan suggest that the supply side effect on price stability is important and that the effect on output stability depends crucially on the importance of trade in goods between the large country and the country in question.