Arms production,national defense spending and arms trade: Examining supply and demand |
| |
| Affiliation: | 1. Ifo Institute, Ifo Center for Public Finance and Political Economy, Poschingerstr. 5, D-81679, Munich, Germany;2. University of Munich, Germany;1. Department of Economics, LMU Munich, Schackstraße 4, 80539 Munich, Germany;2. Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Poschingerstraße 5, 81679 Munich, Germany;3. CESifo, Germany;4. IZA, Germany;5. VATT Institute for Economic Research, Arkadiankatu 7, P.O. Box 1279, FI-00101, Helsinki, Finland;1. Department of Economics and Finance, Brunel University, Uxbridge, UB8 3PH, United Kingdom;2. Institute for Strategy and Analysis, Government Office of the Slovak Republic, Slovakia;3. Department of Economics, Faculty of Economics, Istanbul University, Turkey;4. PRIGO University, Havířov, Czech Republic;5. CESIfo Munich, Germany;6. Rimini Centre for Economic Analysis (RCEA), Canada;7. Global Labor Organization (GLO), Germany;1. Swiss Coordination Centre for Research in Education, Switzerland;2. ifo Institute, University of Munich, Germany;3. CESifo, Germany;4. University of Konstanz, Germany;5. IZA, Germany;6. ROA, The Netherlands;7. University of Bern, Switzerland |
| |
| Abstract: | Scholars have estimated demand functions for national defense spending and investigated international arms trade for a long time. The relationship between supply and demand for military goods has, however, only been examined on aggregate level or in formal models yet. I investigate how the supply of military goods by arms-producing companies and the demand for military goods by both the national government and foreign governments are related by using a panel of up to 195 arms-producing companies in 21 countries for the period 2002–2016. The results show that if the demand for national defense spending increases by 1%, the arms sales by a country’s largest arms-producing companies increase by up to 1.2%. If exports of major conventional weapons increase by 1%, sales increase by up to 0.2%. Arms imports do not affect domestic arms sales because imported and domestically produced arms are complements, and countries mainly import those arms they do not produce themselves. Country-specific estimation results suggest that differences among countries in geopolitical conditions and international relations determine whether a country’s arms industry serves economic rather than security purposes. |
| |
| Keywords: | Arms industry Arms trade Defense spending Panel data L64 F14 H56 C23 |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
