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Natural resources and military expenditure: The case of Algeria

Author

Listed:
  • Sam Perlo-Freeman

    (SIPRI, Stockholm)

  • Jennifer Brauner

    (Birkbeck College, University of London)

Abstract

With world military expenditure rising rapidly since 2000, one of the possible drivers that has drawn less attention has been the role of natural resource revenues, especially oil. Countries as diverse as Angola, Azerbaijan, Chad, Iraq, Kazakhstan, Nigeria, and Timor-Leste have seen huge rises in military expenditure on the back of rapidly increasing oil revenues. Natural resource extraction can generate conflict and create an imperative to protect resource infrastructure from internal or external threats. At the same time it provides a ready source of government revenue, and in particular foreign currency. The lack of transparency often associated with such revenues may facilitate off-budget spending or large, and possibly corrupt, arms purchases. Up to now, most econometric research has not considered the role of resource revenues as a determinant of military expenditure. We provide a preliminary analysis for the case of Algeria, estimating military expenditure as a function of oil revenues and other economic and security factors from 1975 to 2008. We find some evidence that oil revenues have had a statistically significant positive effect on Algerian military expenditure.

Suggested Citation

  • Sam Perlo-Freeman & Jennifer Brauner, 2012. "Natural resources and military expenditure: The case of Algeria," Economics of Peace and Security Journal, EPS Publishing, vol. 7(1), pages 15-21, January.
    • Handle: RePEc:epc:journl:v:7:y:2012:i:1:p:15-21
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    File URL: http://www.epsjournal.org.uk/index.php/EPSJ/article/view/134
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    Citations

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    Cited by:

    1. Bakirtas, Tahsin & Akpolat, Ahmet Gökçe, 2020. "The relationship between crude oil exports, crude oil prices and military expenditures in some OPEC countries," Resources Policy, Elsevier, vol. 67(C).
    2. Dizaji, S.F., 2019. "The potential impact of oil sanctions on military spending and democracy in the Middle East," ISS Working Papers - General Series 644, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Bove Vincenzo & Elia Leandro, 2014. "The impact of American and British involvement in Afghanistan and Iraq on health spending, military spending and economic growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 14(1), pages 325-339, January.
    4. Do, Trung K., 2021. "Resource curse or rentier peace? The impact of natural resource rents on military expenditure," Resources Policy, Elsevier, vol. 71(C).
    5. d'Agostino, G. & Dunne, J.P. & Pieroni, L., 2016. "Corruption and growth in Africa," European Journal of Political Economy, Elsevier, vol. 43(C), pages 71-88.
    6. Frode Martin Nordvik, 2014. "Does Oil Promote or Prevent Coups?," Working Papers No 7/2014, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    7. Sajjad. F. Dizaji & Mohammad Reza Farzanegan, 2018. "Do sanctions reduce the military spending in Iran?," MAGKS Papers on Economics 201831, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Sini, Snow & Abdul-Rahim, A.S. & Sulaiman, Chindo, 2021. "Does natural resource influence conflict in Africa? Evidence from panel nonlinear relationship," Resources Policy, Elsevier, vol. 74(C).
    9. Sajjad F Dizaji, 2024. "The impact of negative oil shocks on military spending and democracy in the oil states of the greater Middle East: Implications for the oil sanctions," Journal of Peace Research, Peace Research Institute Oslo, vol. 61(2), pages 197-213, March.

    More about this item

    Keywords

    Algeria; natural resources; oil; gas; military expenditure;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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