The Demand for Military Expenditure

The demand for military spending in developing countries: A dynamic panel analysis∗

“…Second, there are those studies focusing on a range of economic, political and strategic determinants of military spending, with the most satisfactory empirical analyses tending to take a relatively comprehensive approach. More formal models have been developed from the neo-classical approach, which considers the country or state as maximizing a social welfare function with security an integral component (Smith, 1980(Smith, , 1995. Most theoretical models lead to similar estimation equations for the empirical analysis, where the demand for military expenditure is a function of economic resources, threats to security, and political factors, such as the nature of the state.…”

“…Military expenditure is then determined by balancing its opportunity cost with the security benefits it provides. Examples of this approach are Smith (1980) and Hewitt (1991).…”

“…This equation can then be rewritten as shares in Y rather than levels to give us the demand function commonly used in empirical work (Smith, 1989(Smith, , 1995.…”

Defence Budgets in the Post-Cold War Era: A Spatial Econometrics Approach

“…Similarly, Strauss (1978) tries to fit the model to the spending of the two Cold War Super Powers. Finally, Smith (1980) adapts the Richardson model into a neo-classical framework and estimates it for the UK. These papers all find that the defence spending of each of these countries is correlated with the defence spending of certain other countries.…”

2010 Lewis Fry Richardson Lifetime Achievement Award: Ron P. Smith and the Economics of War and Peace

“…As they pointed out in the same work, "'given a favourable political context and appropriate policies for conversion, no major problems would be involved in the transition "' (Dunne and Smith, 1984, p.309) The attention to modelling and understanding the basis for the inferences drawn is a recurrent theme in Smith's research. For example, his frequently-cited article on the demand for military expenditure (Smith, 1980a) -followed by a correction (Smith, 1987) -laid the foundations for subsequent research on models of military spending and empirical applications. It is far from straightforward to describe the process generating changes in the share of a country's output allocated to military expenditure.…”