Collective Action in the Middle East? A Study of Free-Ride in Defense Spending

This article investigates the existence of the collective action problem among the Arab countries neighboring Israel. The central issue is the time-series pattern of their military expenditures. The collective action framework (Olson, 1971) provides a theoretical guidance for hypothesis testing. The empirical analysis using the cointegration approach has yielded highly consistent evidence that, up to the late 1970s, Egypt was involved in a fierce arms race with Israel, and little evidence that such intensive competition ever existed for Jordan, Lebanon, or Syria alone. The existence of long-run equilibrium relationships and a strong reciprocal impact in such relationships have been established for Egypt and Israel; in regard to minor Front-line Countries (FLCs), long-run relationships with the Israeli expenditure generally exist but the Arab response in the relationships is relatively weak. After the size of the economy is controlled, it is found that Jordan and Lebanon, however, did not take the opportunity to have a complete free-ride of contributing nothing at all, while Syria was least responsive to the increase in the Israeli military spending. Collectively, the minor FLCs added to the equilibrium of the arms races between Israel and the FLCs as a group, especially after the size of the economy for the FLCs as a group and that for Israel are controlled. The empirical findings and conclusion in the article indicate that Olson's original analysis of collective action may be valid in the case of the FLCs.