Democracy and Militarization in Developing Countries: A Panel Vector Autoregressive Analysis

Abstract

This study examines the dynamic relationship between democracy and the military in more than 40 developing countries from 1990 to 2017. We investigate the dynamic interaction between democracy and military institutions using a panel vector autoregressive model and impulse response functions as well as variance decomposition analyses. We show that democracy plays a significant role in the substitution of nonmilitary expenditures for defense expenditures. We also investigate the response of democracy to positive shocks in military and nonmilitary spending. We find that the responses of political system and different indexes of democracy including electoral, liberal, participatory, deliberative, and egalitarian democracy to positive shocks in military expenditures are negative and significant, whereas their responses to the shocks in nonmilitary expenditures are not significant. This result suggests that the political behavior of governments in developing countries is influenced more heavily by their spending on the military sector than by their spending on the nonmilitary sector.

The Knowledge Analysis of Panel Vector Autoregression: A Systematic Review

“…On the one hand, it is necessary to gain the lessons from the empirical experience of PVAR model, so as to better expand the application of it. On the other hand, although the PVAR model has been widely used to support various economic theories and test economic behavior (e.g., C. Canova et al, 2010;Dizaji & Farzanegan, 2023), it is necessary to further enrich the relevant theoretical research of PVAR model under the background of interdisciplinary application, so that it can better serve the development of research in different fields. This is also one of the important objectives of this work.…”

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

“…Military expenditures may crowd out productive non-military expenditures on education and health (Evans & Rose, 2007), which are necessary for establishing democracy. Therefore, democracy and military expenditures are both endogenous and treating one of them as exogenous may bias the analysis (Dizaji & Farzanegan, forthcoming). It is therefore necessary to consider the interrelationships between military expenditures and political institutions when we aim to analyze the military and political consequences of oil rents (see also Tsui, 2010).…”