The Economic Determinants of Military Expenditure in Selected East Asian Countries

Abstract

This paper examines the economic determinants of defence spend ing in six East Asian countries: Indonesia, Malaysia, South Korea, Singapore, Thailand, and the Philippines. It is hypothesized that economic factors play an important role in determining military spending levels in these countries. Our results, which support the earlier work by Geoffrey Harris, suggest that economic variables and resource availability are probably the main determinants of military expenditures. Three basic patterns were found: stabiliza tion, augmentation, and distributed Jags. While all countries increased their defence budgets as expected GNP increased, a significant variation between countries existed as to the timing of the increased defence allocations. The variations were so large that specific a priori generalizations could not be made as to how eco nomic constraints control the budgetary process in these countries.