Convergence of Defence Burdens in Asia-Pacific Economies: A Residual Augmented Least Squares Approach

Abstract

AbstractThis paper investigates convergence of military burdens in the Asia-Pacific countries. Two different datasets of military expenditure have been used in the analysis including the datasets from Stockholm International Peace Research Institute (SIPRI) and World Military Expenditures and Arms Transfers (WMEAT). Unlike the existing papers on convergence of military burdens, we adopt a two-step method that allows the identification of countries that contribute to both stochastic and beta convergence. In the course of investigating the stochastic convergence, we use a residual augmented least squares (RALS) unit root test. The results suggest a weak evidence for convergence of military burdens in Asia-Pacific region, which is a departure from the majority of the existing studies that have provided substantial evidence of convergence. We further examine sigma convergence and the results suggest mixed evidence for convergence of military burdens. The policy implications of the results are discussed in the conclusion section.