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Defense Burden and the Effect of Democracy: Evidence from a Spatial Panel Analysis

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  • Blum, Johannes

Abstract

Do democracies spend less on national defense? This paper provides new evidence of the effect of democracy on defense burden based on a Spatial Durbin Model with panel data for 98 countries for the years 1992-2008. While democracy measured by means of an index variable covering the entire range from perfect democracy to perfect autocracy turns out to be insignificant, dummy variables indicating transition to higher levels of democracy reveal a statistically highly significant negative effect of democracy on a country's defense burden. Allowing for country-specific effects reveals heterogeneity in the effect of democracy across countries. Apart from the effect of democracy, the estimation results indicate strong spatial dependence of military burdens across countries. Moreover, they provide statistical evidence for a peace dividend, for substitution effects in defense spending and for a negative effect on the military burden for countries when they exhibit a trade surplus instead of a trade deficit.

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  • Blum, Johannes, 2018. "Defense Burden and the Effect of Democracy: Evidence from a Spatial Panel Analysis," Munich Reprints in Economics 62815, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:62815
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    References listed on IDEAS

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    1. Kjell Hausken & Christian W. Martin & Thomas Plümper, 2004. "Government Spending and Taxation in Democracies and Autocracies," Constitutional Political Economy, Springer, vol. 15(3), pages 239-259, September.
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    Cited by:

    1. Blum, Johannes, 2019. "Arms production, national defense spending and arms trade: Examining supply and demand," European Journal of Political Economy, Elsevier, vol. 60(C).
    2. Johannes Blum, 2021. "Democracy’s third wave and national defense spending," Public Choice, Springer, vol. 189(1), pages 183-212, October.
    3. Klaus Gründler & Armin Hackenberger & Anina Harter & Niklas Potrafke, 2021. "Covid-19 Vaccination: The Role of Crisis Experience," CESifo Working Paper Series 9096, CESifo.
    4. Johannes Blum & Niklas Potrafke, 2020. "Does a Change of Government Influence Compliance with International Agreements? Empirical Evidence for the NATO Two Percent Target," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(7), pages 743-761, October.
    5. Johannes Blum & Niklas Potrafke, 2019. "Internationale Abkommen und Regierungswechsel: Evidenz zum NATO-Zwei-Prozent-Ziel," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(03), pages 18-21, February.
    6. Olejnik, Łukasz Wiktor, 2024. "Left-wing butter vs. right-wing guns: Government ideology and disaggregated military expenditures," ZEW Discussion Papers 24-026, ZEW - Leibniz Centre for European Economic Research.

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