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The causal relationship between economic growth and defence spending has attracted considerable attention and has been the subject of many empirical studies. Hoping to contribute to the existing pool of literature, this paper examines the relationship between military expenditure and growth in the case of Cyprus, a small island economy, for the period 1964-99. The findings reported suggest the presence of bi-directional instantaneous causality between defence spending and economic growth. [ABSTRACT FROM AUTHOR]

Greece has over the years allocated substantial human and material resources to defence. Its defence burden (i.e. military expenditure as a share of GDP) has invariably been substantially higher than the EU and NATO averages. Furthermore, during the post-bipolar period, when the defence budgets of most countries shrunk, Greek defence spending grew in real terms. This paper contributes to the existing literature on Greek defence spending and its effects by empirically estimating the impact of such expenditures on the country's fiscal situation during the period 1960-2001 something that has largely been ignored in the relevant literature. In particular, it focuses on the effects of military spending on government debt and its two components: internal and external debt. The empirical findings reported here suggest that central government debt and, in particular, external debt has been adversely influenced by military expenditure but also by the domestic political cycle. [ABSTRACT FROM AUTHOR]

The defense-growth nexus is investigated empirically using time series data for the US and allowing the effect of defense spending on growth to be non-linear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: the positive externality effect of defense spending prevails for relatively lower levels of defense spending (with respect to the history of defense spending in the US) and reverts its influence for higher levels. [ABSTRACT FROM AUTHOR]

The aim of this paper is to provide insights on war spending using simple tools of financial calculus rather than developing a general theory. Combining Grossman and Han's theory of war finance with the empirical literature that displays a straightforward relationship between the real value of money and wartime military events, we advocate the use of the real option approach of war spending. Some calculations and an empirical example illustrate this approach. [ABSTRACT FROM AUTHOR]

This paper examines the impact of national security threats on a nation's economic growth and fiscal policy based on a case study of the Korean peninsula. I construct four measures of provocations using a newly-assembled list of North Korean provocative events going back to 1960. The results show that the overall impact of North Korean provocations on South Korea's short-run economic growth is negligible. Since inter-Korean relations have gone through four phases, this paper also estimates the impact of provocations over each subperiod. Provocations had a significant impact on South Korea's economic growth during 1960-1970 and 1992-1997 when inter-Korean tensions were high, but the effects took on different signs. While provocations decreased South Korea's economic growth during 1992-1997, it had a positive impact on South Korea's macroeconomy before 1970. This paper provides evidence that the effect of national security threats may vary with the responses from the government and political factors such as the relation between the targeted country and the country that inflicts the threat. [ABSTRACT FROM AUTHOR]

Economic shocks, including shocks to commodity export prices, have often been related to civil conflict. However, the literature usually assumes that commodity prices have linear effects. In this paper, we hypothesize that negative and positive commodity export price shocks can have asymmetric effects: while negative shocks are likely to increase conflict, positive shocks can have a smaller conflict-reducing effect or even increase conflict. We test this hypothesis in a dataset for battle deaths during ongoing civil wars. Consistent with the hypothesis, negative price shocks increase battle deaths, but positive price shocks also have a positive effect. The positive effect is concentrated and becomes significant in countries with weak pre-conflict institutions that experience positive price shocks to fossil fuels. We conclude that a combination of institutional reforms, economic diversification, and price stabilization might reduce battle deaths in fuel-dependent countries with weak institutions. [ABSTRACT FROM AUTHOR]

In March 2015, the Chinese government initiated an important reform program targeting the defense industry, namely civil–military integration (CMI), with the objectives of introducing military technologies to the civilian market and infusing private capital into military enterprises. On examining this unique exogenous shock in a 2007-2017 sample of Chinese A-share listed firms, we identify the following effects of CMI on military firms' performance. (1) The market value of military firms significantly increases after the establishment of the CMI policy in 2015 and the market value of military firms is on average 6.682% higher after 2015. (2) This effect is robust to propensity score matching, instrumental regression, alternative measures of corporate market value. (3) The positive impact of CMI on military listed firms' market value is stronger for firms with lower innovation ability and weaker corporate governance, suggesting that the CMI policy can improve the research and development abilities and ease the agency conflicts of military firms. (4) After 2015, military firms with weaker financial constraints and those located in provinces with lower marketization levels perform better. Overall, offering a micro-perspective on military firms, this paper complements the growing literature on defense economics and clarifies how CMI improves military firms' performance. [ABSTRACT FROM AUTHOR]

The level of defence industrial innovation success has been modest in Malaysia, despite continuous investment into research and development (R&D). The authors use the Defence Research and Development Stakeholder Engagement Framework (DRDSEF) to argue that strategic collaborative engagement between stakeholders is critical for successful industrial and technological innovation. This paper has two aims: to describe the role of the stakeholders in managing defence R&D funding and to evaluate the challenges faced by these stakeholders in managing government defence R&D allocation for industrial and technological innovation. This is an exploratory case study using a combination of interpretivist and pragmatist philosophical approaches. Analysed data consists of secondary resources and primary resources included surveys in the form of open-ended semi-structured interviews and participatory observation. This paper concludes that successful defence R&D stakeholder engagement requires an open and independent platform, enhanced industry-academia cross-sector fertilisation and collaborative data analytics management tools to share information. [ABSTRACT FROM AUTHOR]

This paper provides both a quantitative and a qualitative review and interpretation of 153 journal papers on NATO burden sharing behaviour published over the period 1966–2020. Based on our findings, we distinguish three paradigms, reflecting the main questions and views within their particular realm of burden sharing research. Subsequently, these three paradigms study (1) the distribution of defence burdens amongst NATO member states; (2) the determinants of NATO burden sharing behaviour; and (3) how contributions to the public good of individual member states merge to determine the overall level of the good available for consumption. For each paradigm, a qualitative insight in evolving bodies of literature is offered. As it turns out, most burden sharing studies are limited to one paradigm and its ensuing main question. Future research may benefit from cross-fertilization across paradigms, longitudinal approaches and a widening of empirical foci to encompass novel threats. [ABSTRACT FROM AUTHOR]

This paper aims to compare the educational attainment of a conflict region (the Deep South) and a non-conflict region (the rest of the South) of Thailand using the Socio-Economic Survey, 2015. This paper employs the Instrumental Variable approach and Oaxaca-Blinder decomposition in an intergenerational regression model. When controlling parental schooling, household income and size, religion, and gender, the results show that children from the Deep South obtain almost one year less schooling than children from the rest of the Southern region. Interestingly, Muslims are ahead in terms of educational attainment when compared to non-Muslims in the non-conflict region, but not in the conflict region. Females outperform males in both regions, but the coefficient of female dummy is higher in the non-conflict region. Moreover, the rate of intergenerational transmission of educational attainment is higher in the Deep South compared to that in the rest of the southern region, which may lead to long-term educational inequality in the Deep South region. The Oaxaca-Blinder decomposition confirms that the 40% schooling gap between these two regions is unexplained but might be due to the chronic social unrest. The findings of this paper show that customized educational reforms and policies to resolve the conflict in the Deep South of Thailand should be employed. [ABSTRACT FROM AUTHOR]

This paper explores the issue of French executions during the Great War in a quantitative perspective. Based on the 'Shot in the First World War' database of the Ministry of Defense, we first provide a statistical portrait of the French soldiers who were sentenced to death by courts-martial or summarily executed. Then, we analyze the temporal distribution of executions using a regression approach. More specifically, we investigate whether the variations in the number of executions over time were related to the intensity of engagements. Finally, focusing on the soldiers' place of birth, we examine the differences across counties (départements) in the execution rate. Our results suggest that the vast majority of the executed soldiers were 'poilus' like the others who found themselves before a firing squad for having committed a fault in a moment of weakness, often after being involved in particularly bloody fighting, and sometimes under the influence of alcohol. Their acts were probably, in most cases, much more driven by survival instinct than by pacifist motives or other political considerations. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to examine the performance of Indonesia's informal offset policy over the period 1976-2014. The paper offers four original academic perspectives: firstly, it is framed by reference to what Indonesia's former Minister of Technology, Dr Habibie, described as the Progressive Manufacturing Plan, a novel approach in which offset was intended to play a critical supportive role in the systematic development of strategic civil-military industries; secondly, the analysis is structured into three distinctive 'development-survival-revival' industrialisation stages that impacted on the performance of both offset and the broader defence economy; thirdly, the study is uniquely different in the sense that the offset case studies all occurred in an era absent of a formal offset policy regime; and lastly, the study provides a wealth of rich data in a subject field well-known for its sensitivity, if not secrecy, and thus is characterised by a paucity of empirical evaluation. [ABSTRACT FROM AUTHOR]

This paper explains the circumstances where economic growth increases the likelihood of interstate war. Optimism created by high and sustained economic expansion permeates a state, increasing elite and mass optimism for the use of deadly force. Without relief, such unbridled sanguinity can lead states to war. However, other forces reduce the probability of war. Regional democracy, bilateral trade, and trade openness slow down the process where states go to war. This paper hypothesizes that key factors raise the temperature of disputes, increasing the likelihood of a political dispute combusting to war, while other attributes inhibit the process to war. Economic growth catalyzes such reactions, while regional and joint democracy impede the probability that a war sparks. This paper produces monadic and dyadic results demonstrating that economic growth increases the likelihood of war, while other factors such as interstate trade openness, bilateral trade, dyadic democracy, and regional democracy slow down the process of war, making war less likely. [ABSTRACT FROM AUTHOR]

In recent years, geopolitical risk (GPR) has been a crucial factor in investment decisions and stock markets. Therefore, we explore the research on the GPR by employing bibliometric and scientometric analytical techniques. We find 366 scientific contributions in December 2021 from the Scopus database by searching 'Geopolitical risk' in abstracts, keywords, and titles. Our findings show that GPR research has gained momentum in the last three years. Specifically, the journal Defence and Peace Economics has one of the highest numbers of research and citation on GPR. Authors in Asia also dominate the GPR literature. Overall, this study contributes to the literature by presenting the existing research that may give new insights for prospective studies in GPR. [ABSTRACT FROM AUTHOR]

The Iran-Saudi Arabia conflict is an ongoing struggle for influence in the region that has created uncertainty, affected oil prices and regional economics. This paper uses wavelet analysis to examine the frequency and time-varying co-movement and casual nexus between petroleum prices (OP) and financial liquidness (MS) with and without geopolitical risk (GPR). The aim is to test the validity of the monetary equilibrium model from 1988 to 2019. The model is supported by the findings, as both short and medium-term association is found between OP and MS at high frequencies in the presence of GPR. We find a medium-term association between OP and MS in the absence of GPR. The paper's overall conclusion suggests that GPR affects OP and OP, in turn, impact MS. Diversifying economic activities to minimize oil dependency, which is sensitive to external shocks, is suggested as a mitigation solution. [ABSTRACT FROM AUTHOR]

The Russian invasion of Ukraine has generated a new impetus towards an enhanced European defence pillar, while many EU members have announced significant increases in their respective defence budgets over the coming years. Expectedly, a large percentage of the capital and technological inputs required to support the efforts towards a common European defence and the increased defence needs of many EU members will be procured from the European Defence Technological and Industrial Base (EDTIB). The European defence companies are among the major suppliers of conventional arms in the world. Their cumulative share of world arms exports is the second largest globally. This paper uses a Benefit-of-the-Doubt (BoD) model via Data Envelopment Analysis (DEA) to comparatively evaluate the sales performance of major European defence industries vis-à-vis other major international arms producers. The sample used in the analysis contains 72 firms and spans the period 2016–2020. The findings indicate that on the whole US defence manufacturers have a dominant presence among the biggest global producers and outrank many major European companies. These findings offer valuable policy recommendations. [ABSTRACT FROM AUTHOR]

European defence policy offers opportunities for spending more and better where better achieves more from existing resources. Increased defence spending needs to be justified by the threats to Europe which have to be identified and defined. Higher defence expenditure usually focuses on inputs rather than final outputs in the form of greater peace, protection, security and the safety of a nation's citizens. The task is to show the opportunities for applying economic analysis to the complexities of European defence policy and collaborative defence projects. Economic efficiency criteria identify the contribution of final outputs, substitution and competition to the formulation of European defence policy, but the final outcomes are likely to be determined by military-political factors rather than economic efficiency criteria. The paper provides a critique of European defence policy. [ABSTRACT FROM AUTHOR]

In contrast to much of the extant literature, the paper devises a composite security burden measure for the NATO alliance that accounts for three different contributions by allies to their collective security: namely, military expenditure (ME), foreign assistance, and UN peacekeeping spending. Generally, NATO defense burden sharing and free riding are judged solely based on ME even though foreign assistance and peacekeeping promote world prosperity, stabilize regimes, and quell conflicts that affect NATO's collective security. Our parametric tests for free riding apply a spatial-lag panel model, which addresses the interdependency issues, to a broader security-spending measure that accounts for allies' membership, contiguity, and inverse distance. In all spatial models, we uncover robust evidence of free riding where allies decrease their aggregate security spending in response to increases in the collective security spending of other allies. We apply a panel generalized method of moments (GMM) estimator to adjust for endogeneity concerns. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between conflict trajectories and years of schooling in India for girls and boys. It adopts propensity score matching methods on panel data from the India Human Development Survey (2004/05-2011/12) merged with conflict data from the South Asia Terrorism Portal. Conflict is measured according to the dynamic trajectory of Naxal violence-related fatalities at the district level, distinguishing areas of chronic conflict with those experiencing dynamism in conflict intensity over time. ATT estimates indicate that conflict is associated with a reduction in years of schooling for both genders, though relatively high for girls (by a quarter of a year for girls and by 0.16 of a year for boys), driven by large reductions in school accumulation for girls living in areas of chronic conflict. Results are consistent when adopting different methods, alternative measures of conflict fatalities, and accounting for other conflicts and selective migration. Examining transmission mechanisms suggest that household spending on girls' education may be de-prioritised amidst conflict, while conflict may also weaken or destroy school infrastructure. Results suggest that policy responses should prioritise girls' education in areas of chronic conflict, not only in 'fragile states' but in countries where conflict remains a subnational concern. [ABSTRACT FROM AUTHOR]

This paper studies the impact of education on domestic terrorism in Asian countries from 1970 to 2018. A control function approach is utilized to address the endogeneity of education on terrorism. Generally speaking, results show that education promotes domestic terrorism in Asia. Negative binomial regressions with and without control function are run for other parts of world to examine whether the patterns in Asia hold worldwide. Other important determinants of domestic terrorism in Asia include regime type, ethnic fractionalization, linguistic fractionalization, religious fractionalization, GDP per capita, and trade openness. This paper contributes to the literature by 1) applying a control function approach to control for possible endogeneity of education on terrorism, 2) analyzing exclusively Asia, a region where terrorism has been increasing rapidly over the last decade, (3) and focusing on domestic terrorism. [ABSTRACT FROM AUTHOR]

Keeping with the established tradition in our journal, this paper reviews and surveys the last decade, that is volumes 21–30. It offers an overview of the thematic coverage of the papers published in Defence and Peace Economics and the changes that have occurred, points to existing gaps in the defence economics literature and possible future directions in the research agenda of this growing and vibrant field. [ABSTRACT FROM AUTHOR]

GDP is one of the most robust indicators of civil war onset. As debate continues over the mechanisms underlying the relationship between economic development and civil war, this paper scrutinizes the indicator of GDP directly, disaggregating it into its constituent components to examine whether their distinct associations with conflict onset can shed some light into the black box. Analysis of the individual correlations allows for identification of the driving force behind the aggregate statistical relationship. With this information to hand, consistency checks can be made with existing theories and a new theory presented in this paper, which draws attention to a critical structural factor that drives the supply of civil war labor, namely the lack of consumption opportunities. This factor increases the likelihood of civil war in less economically developed countries as individuals with low consumption opportunities have little to lose from reordering the economic and political system. Analysis of the correlations between components of GDP and the onset of civil war shows that this new theory is most consistent with the key drivers of the aggregate relationship. The examination also highlights a new indicator, which is arguably preferable to GDP as a measure of this relationship. [ABSTRACT FROM AUTHOR]

This paper provides an overview of the Canadian defence sector following the Cold War. A review of Canadian defence policy in this period indicates that, though the mission of the Canadian military did not change, fiscal realities forced severe restrictions on the size and capabilities of the organization. Comparisons between Canada and other G7 NATO nations indicate that throughout this period, Canada has consistently devoted fewer resources to the military than its allies. A review of Canada's defence industrial base and defence policy indicates that this limited funding has led to a small and uncompetitive defence sector in the Canadian economy. Lastly, a regression analysis of Canada's defence spending is undertaken which reveals that domestic economic variables are the primary determinant of Canadian defence spending during this period. [ABSTRACT FROM AUTHOR]

We draw on existing surveys on the economics of terrorism, classifying the contributions to the field by theme, main approach and methodology. Research articles are divided into the themes: Definition and measurement of terrorist activities; Nature of terrorists; Utility cost of terrorism; Impact of terrorism on aggregate output; Terrorism and specific sectors of activity; Terrorism and economic policy; and Counter-terrorist policies. For the set of papers examined, as well as for each theme, we divide the papers by main approach - macroeconomic/microeconomic - and methodology - theoretical/empirical. We find wide variation in approach/methodology across research themes, suggesting extensive research opportunities. [ABSTRACT FROM AUTHOR]

Although the economic effects of defense expenditures have become an issue of intense interest over the recent decades, little is known about how the individual components of military spending affect the economy. Nevertheless, military spending is highly heterogeneous in its nature consisting of assorted categories that broadly encompass salaries' payment, operations, training, research and development, and maintenance of equipment, arms and facilities. Naturally, this implies that military spending can affect the economy in various and probably contradictory ways. Hence, by considering this distinctive element of military spending, the present paper aims to uncover the economic effects of the most important components of the US defense budget focusing on a period from 1949 to 2021. Applying linear and non–linear methods on a Barro–style regression, the statistical evidence reported herein suggests that heavy reliance on the military sector entails potentially high opportunity costs. [ABSTRACT FROM AUTHOR]

In this paper, we develop a new dataset on indirect state rivalry relations based on different matrix calculations for 154 countries, over the period 1970-2015, and demonstrate their importance in explaining civil wars. After controlling for spatial distances between rival countries, we demonstrate that 1) the presence of direct and indirect rivals exerts a positive and significant effect on the risk of civil war; 2) decreasing levels of military capacity of one state relative to its rivals (direct and indirect) also influence the probability of internal conflict. Finally, we confirm the significance of our indicators by using on the one hand the random forest algorithm, a machine learning method using decision trees and on the other hand, the Kaplan-Meier estimate for the duration of the civil wars. [ABSTRACT FROM AUTHOR]

This paper estimates the effect of the U.S. Army's June 2020 decision to increase the service obligation for Army aviators from six to ten years on West Point cadets' preferences for aviation. We use a difference-in-differences identification strategy, exploiting how the policy took effect after the Class of 2021 submitted four sets of interim preferences but before cadets submitted two final sets of preferences, using preferences from cadets in the Classes of 2015 to 2020 to form counterfactual outcomes. The increased service obligation made aviation less popular, reducing the percentage of cadets who ranked aviation as their first choice by 4.1 percentage points (baseline of 18.5%) and increasing the percentage of cadets who ranked aviation as among their three lowest choices by 6.9 percentage points (baseline of 8.9%). The reduction in aviation's popularity is most pronounced among cadets with above-median grade-point-averages, above-median aviation talent scores, and above-median SAT scores. [ABSTRACT FROM AUTHOR]

This paper examines the performance of the Greek defence industry in terms of their (co)authoring of scientific publications. In the context of knowledge-intensive technological and industrial policy, science outputs are important indicators of the respective intellectual capital of those firms. This is done through bibliometric analysis. Findings indicate that there is an increase in the number of publications over time. This is attributed to a small number of over performing firms – among which a super performer is identified. In terms of industrial classification, the NACE codes of these over performing firms overlap the respective bibliometric Subject Area Classifications. This is a clear indication of a match between scientific and industrial priorities. On the author level, findings indicate that a small number of authors (one per the top 10 firms) are responsible for a large (and in many cases, disproportionate) percentile of total publications per firm. Fourth, using keyword network analysis, most frequent keywords are detected pointing to specific topological clusters of research hotspots. [ABSTRACT FROM AUTHOR]

The recent economic literature concludes that geopolitical risk has significantly impacted various economic variables over the past years. This paper focuses on a new dimension and seeks to answer if the US major macroeconomic indicators affect the international geopolitical risk (GPR). Based on our knowledge, there is no such study conducted so far, and thus, we propose to fill this gap. We constructed a theoretical framework and estimated an econometric model using the Autoregressive Distributed Lag methodology and quarterly data (1973–2020). The results show a statistically significant effect of the US macroeconomic variables on the GPR. The long-run results are decisive and unique, while the short-run influences are mixed in significance levels and signs. Hence, the short-run impact may differ over time and its final impact depends on the outweighing effect between the harmful and beneficial outcomes. The findings prove that a dominant country with economic and political powers can influence the GPR. From a policy implication side, we affirm that globalization should proceed side by side with cooperation and coordination among nations to solve economic glitches. Otherwise, geopolitical risk will make the economic performance worse. [ABSTRACT FROM AUTHOR]

Why have Israel and the Palestinians failed to implement a 'land for peace' solution, along the lines of the Oslo Accords? This paper studies the application of strategic behavior models, in the form of games, to this question. I show that existing models of the conflict largely rely on unrealistic assumptions about what the main actors are trying to achieve. Specifically, they assume that Israel is strategically interested in withdrawing from the occupied territories pending resolvable security concerns but that it is obstructed from doing so by violent Palestinians with other objectives. I use historical analysis along with bargaining theory to shed doubt on this assumption and to argue that the persistence of conflict has been aligned with, not contrary to, the interests of the militarily powerful party, Israel. The analysis helps explain, from a strategic behavior perspective, why resolutions like the Oslo Accords, which rely on the land for peace paradigm and on self-enforcement, have failed to create peace. [ABSTRACT FROM AUTHOR]

This article investigates the determinants of terrorist group formation. Using a series of negative binomial regressions with both time and country fixed effects, this paper finds that population, state failure, and civil wars are positive determinants of terrorist group formation. Per capita income has an inverted U-shaped relationship with the incubation of terrorist groups, while regime type is not a significant indicator of the establishment of new terrorist groups. This paper contributes to the existing literature by taking the annual number of newly formed terrorist groups as the dependent variable and extending the time frame of previous research with the help of a recently published dataset. [ABSTRACT FROM AUTHOR]

We investigate the long-term relationship between conflict-related migration and individual socioeconomic inequality. Looking at the post-conflict environment of Bosnia and Herzegovina (BiH), a former Yugoslav state most heavily impacted by the wars of the early 1990s, the paper focuses on differences in educational performance and income between four groups: migrants, internally displaced persons, former external migrants, and those who did not move. The analysis leverages a municipality-representative survey (n ≈ 6,000) that captured self-reported education and income outcomes as well as migration histories. We find that individuals with greater exposure to conflict had systematically worse educational performance and lower earnings two decades after the war. Former external migrants now living in BiH have better educational and economic outcomes than those who did not migrate, but these advantages are smaller for external migrants who were forced to move. We recommend that policies intended to address migration-related discrepancies should be targeted on the basis of individual and family experiences caused by conflict. [ABSTRACT FROM AUTHOR]

In this paper, we study closely the relationship between arms exports, labor productivity and economic growth. Using a connectedness measurement technology fundamentally grounded in modern network theory, we determine the size and direction of the spillover effects between these three variables. Our findings indicate that shocks from arms exports have direct spillovers over the labor productivity and GDP growth, whereas the reverse is not captured by our data. We also provide a dynamic analysis of the spillovers that confirm the direction of spillovers from arms exports to the other variables. The recent evolution of arms exports from the United States together with the changes in arms exports policy show the timeliness of studying the effects of this particular trade to the rest of the economy. [ABSTRACT FROM AUTHOR]

Most real-world conflicts are characterised by the presence of third-party interventions as well as prolonged and revengeful violent interactions between the conflicting parties. However, most of the conflict literature studies the impact of each of these forces – third-party intervention and revenge motivations – on the conflict, in isolation from each other. This paper attempts to fill in this gap and aims to explore the impact of these two forces acting in conjunction with each other on a conflict situation. In fact, we also endogenise the intervention decision of the third party and explore parametric restrictions under which a third party decides to intervene (either as an ally of one of the conflicting parties or as an 'idealist' aiming to reduce overall conflict levels) and its repercussions on associated conflict levels. We also present narrative evidences of some real-life conflicts that amply exhibit the two forces of third-party intervention and revenge. Peace is the only battle worth waging. – Albert Camus [ABSTRACT FROM AUTHOR]

This study estimates the economic effects of nuclear weapons development efforts in Pakistan using synthetic control group methods. Pakistan started its nuclear weapons program in 1972 and conducted its first test in 1998. This paper focuses on the growth impacts during the 1973 to 1997 period, before Pakistan established itself as a nuclear power. I create a synthetic control group for Pakistan using Per capita Gross Domestic Product (GDP) from the 1950 to 1972. The impact of the nuclear weapons development program is measured as a treatment dummy for the years 1973–1997 in a Difference-in-Difference model. I find that Pakistan's per capita GDP would have been an average of about $718 per year higher had the country not undertaken the effort to produce a nuclear weapon. This equates to per capita GDP being 27.8% lower on average over the 25-year weapons-development period. Results are robust to several alternative specifications, including country exclusion, sparse synthetic controls, non-outcome characteristics as predictors of GDP, and in-space placebo experiments of differing specifications. [ABSTRACT FROM AUTHOR]

This paper uses the event study methodology to examine whether 'significant' terror attacks that occurred in the Eurozone in the 21st century affect stock markets. We find that such events do have a negative effect both on the market of the country suffering the attack, and on the general Eurozone market index. Depending on the method and the market index used, this effect ranges between −0.3% and −0.62% and is concentrated entirely on the day of the attack. We moreover find that this effect is more pronounced and of significance during the first decade of the 21st century. Regression analysis revealed that the most important factor affecting the magnitude of the effect is economic damage resulting from the attack. [ABSTRACT FROM AUTHOR]

This paper examines the demand for military expenditure in eighteen selected Indo-Pacific countries for the years 1993–2018. As the dominant powers, the U.S. and China characterize the geopolitical structure of the Indo-Pacific region. Sino-U.S. relations are newly quantified by measuring the number of cooperative and conflict events between China and the United States based on the Global Database of Events, Language, and Tone (GDELT). After incorporating Sino-U.S. relation variables into neoclassical demand models, the panel data estimating results reveal that the increasing number of confrontations from the United States toward China has lead to increases in non-U.S. allies' military expenditure while the rise in China confronting the United States has not. U.S. allies in the Indo-Pacific region have tended to increase military expenditure when the United States increases its pressure on China. The empirical results provide evidence that Sino-U.S. relations affect the level of military expenditure in the Indo-Pacific Region. [ABSTRACT FROM AUTHOR]

This paper sets out to explore whether the Turkish geopolitical uncertainty exhibits significant linkages with fluctuations in the Turkish lira (TRY) values against other currencies. The period examined covers the Erdoğan administration (March 2003 up to the present). The innovative geopolitical uncertainty index by Caldara and Iacoviello and modern GARCH methodologies are adopted in order to explore how geopolitical risk influences currency values and the overall economy during this turbulent period. Econometric outcomes reveal that geopolitical uncertainty leads to devaluation of TRY against the US dollar, the Swiss franc and the Swedish krona but in a non-significant manner whereas mixed results emerge concerning the impacts of macroeconomic or financial variables. [ABSTRACT FROM AUTHOR]

This paper examines many instances of the same investment game to explore the questions of how violence affects trusting and trustworthy behaviors and how those behaviors affect a country's level of violence or peacefulness. Average responses of players in the investment game are compared across countries experiencing varying degrees of peacefulness or conflict. The primary finding is that a macroeconomic peace index can predict trusting behavior but has no effect on trustworthy behavior. Trustworthiness, on the other hand, affects peacefulness. It is necessary, then for policymakers to foster trust and trustworthiness among individuals in order to maintain peace, and they must work to rebuild macroeconomic institutions to restore trust, to repair communities, and to revitalize economies after conflict. [ABSTRACT FROM AUTHOR]

Recent anecdotal evidence from the civil wars in Somalia and Yemen suggest that water scarcity may shape the dynamics of civil wars. While a considerable body of research has examined the connection between water scarcity (such as low rainfall) and the onset of civil war, very little research has examined how water scarcity may shape the duration and outcomes of civil wars. Looking specifically at rainfall, this paper argues that changes in access to water play a key role in the duration of civil wars. As rainfall declines, there is a reduction in resources available to both the government and the rebel group, leading to a stalemate in fighting. Furthermore, this paper argues that declines in rainfall are felt more acutely by rebel groups who seek to challenge the government through conventional warfare. This paper tests these propositions using hazard models. The results provide robust support for the propositions. [ABSTRACT FROM AUTHOR]

The article discusses various reports published within the issue including one on the use of key concepts of economic analysis as employed in security economics, threat perceptions and a quantified taxonomy of recent terrorism research.

Provides an overview of a series of papers on the economic impact of civil wars, internal threats and terrorism. Papers on the spatial spread of the economic impact of civil wars; Analysis of the economic consequences of narco-terrorism; Information on the economic consequences of transnational terrorism.

This paper investigates how affective forecasting errors (A.F.E.s), the difference between anticipated emotion and the emotion actually experienced, may induce changes in preferences on time, risk and occupation after combat. Building on psychological theories incorporating the role of emotion in decision-making, we designed a before-and-after-mission survey for Danish soldiers deployed to Afghanistan in 2011. Our hypothesis of an effect from A.F.E.s is tested by controlling for other mechanisms that may also change preferences: immediate emotion, trauma effect – proxied by post-traumatic stress disorder (P.T.S.D.) – and changes in wealth and risk perception. At the aggregate level, results show stable preferences before and after mission. We find positive A.F.E.s for all three emotions studied (fear, anxiety and excitement), with anticipated emotions stronger than those actually experienced. We provide evidence that positive A.F.E.s regarding fear significantly increase risk tolerance and impatience, while positive A.F.E.s regarding excitement strengthen the will to stay in the military. Trauma has no impact on these preferences. [ABSTRACT FROM AUTHOR]

One of the outcomes of the 2014 North Atlantic Treaty Organization (NATO) Summit held in Wales was the recommendation that allies should strive towards spending at least 2% of their Gross Domestic Product (GDP) on military expenditure by 2024. This has in recent years put the debate on burden sharing within the Alliance in the limelight. Within the Alliance, the interpretation of the guidelines is different. This is partly because the U.S.A, especially under President Trump, has consistently viewed the 2-% guideline as a binding agreement. Some allies have, however, indicated that their military expenditure will not increase to the recommended threshold by the set deadline. Critics of the guideline have also identified several shortfalls associated with it and consequently dismissed it. Those who support it emphasize for instance that it contributes to addressing grievances about free riding within the Alliance. This paper contributes to this discussion and literature on demand for military expenditure by assessing how NATO's two percent guideline can be viewed from a demand for military expenditure perspective. It also proposes and estimates a dynamic panel model for this purpose. Empirical evidence presented suggests that fiscal conditions require attention in the debate on the two percent guideline. [ABSTRACT FROM AUTHOR]

This paper studies how local labour market conditions influence the quality composition of those who volunteer for military service in Sweden. A fixed-effects regression model is estimated on a panel data set containing IQ scores for those who applied for military basic training across Swedish municipalities during the period 2010 to 2016. The main finding is that low civilian employment rates at the local level tend to increase the mean IQ score of those who volunteer for military service, whereas the opposite is true if employment rates in the civilian labour market move in a more favourable direction. As such, the results suggest that the negative impact of a strong civilian economy on recruitment volumes is reinforced by a deterioration in recruit quality. [ABSTRACT FROM AUTHOR]

This paper constructs a theoretical model involving supply-side effect, demand-side effect, and security effect produced by military spending to explore the effects of military spending and foreign military threat on employment. This paper proves that the relationship between defense burden and employment is nonlinear (i.e., reverse U shape.). Hence, we find the defense burden of maximizing employment. In addition, we argue that a rise in foreign military threat will be detrimental to the level of output and in turn lead to a reduction in employment. Finally, we show that an increase in the variance of the foreign military spending shocks will raise the level of output and then lead to an increase in employment. [ABSTRACT FROM AUTHOR]

This paper establishes a new method of estimating public dissent that is both cost-effective and adaptable. Twitter allows users to post short messages that can be viewed and shared by other users, creating a network of freely and easily observable information. Drawing data directly from Twitter, we collect tweets containing specified words and phrases from citizens voicing dissatisfaction with their government. The collected tweets are processed using a regular expression based algorithm to estimate individual dissent; which is aggregated to an overall measure of public dissent. A comparative case study of Canada and Kenya during the summer of 2016 provides proof of concept. Controlling for user base differences, we find there is more public dissent in Kenya than Canada. This obvious, but necessary, result suggests that our measure of public dissent is a better representation of each country's internal dynamics than other more sporadic measures. As a robustness check, we test our estimates against real-world civil unrest events. Results show our estimates of public dissent are significantly predictive of civil unrest events days before they occur in both countries. [ABSTRACT FROM AUTHOR]

This paper introduces model uncertainty into the empirical study on the determinants of foreign aid at the regional level. This is done by adopting a panel Bayesian model averaging approach applied on the data of 10 Sahel countries spanning from 1985 to 2017. Our results suggest that, among the regressors considered, those reflecting trade stakes including arm imports, institutional conditions and socioeconomic prospects tend to receive high posterior inclusion probabilities. These findings are robust to changes in the model specification and sample composition and are not meaningfully affected by the linear panel data model applied. The results highlight three concerns that justify aid flows towards Sahel countries: (i) interest of donors (self-interest), (ii) recipient economic needs and (iii) security purposes. The paper recommends Sahel countries to strengthen international cooperation for security and peace in compliance with the 13th goal of the Agenda 2063 of the African Union. [ABSTRACT FROM AUTHOR]

This paper discusses central ideas in the work of Charles Hitch. He is known for his pioneering contributions to defense economics and 'systems analysis' and for his introducing program budgeting in McNamara's Pentagon. We discuss the evolution of his work and ideas, and how his views on systems analysis were influenced by his broader interest in human and organizational behavior. The paper also emphasizes Hitch's skills as leader and manager of organizations (in particular as the head of the economics department at RAND). [ABSTRACT FROM AUTHOR]

This paper provides a rationale for group support for political violence which does not provide a material benefit. Rabin’s (1993) theory of fairness is adopted to demonstrate that although group violence may not be a Nash equilibrium it may be a fairness equilibrium in a game containing psychological payoffs. For this to happen the material stakes must be perceived as low and psychological payoffs are expressive. Although the material stakes are actually high, members of each group may choose expressively to support the use of violence because the probability of being decisive is low. The paper also considers the possibility of peace emerging as a fairness equilibrium. This can only happen if each group perceives the other as making some sacrifice in choosing peace. [ABSTRACT FROM PUBLISHER]