Domestic Arms Research Articles

Does Increase in Defence Spending Lead to More Risk of Sovereign Debt Defaults?

ABSTRACT The objective of this study was to identify the determinants of sovereign debt default for a panel of twenty developing nations over the period 1970 to 2019, specifically focusing on the influence of defence/military spending. This study’s findings indicate that increased military spending has generally reduced default risk in the examined countries, but that excessive military spending, past a certain threshold, can have strong detrimental impacts on the probability of sovereign debt default. Additionally, the findings show that the country’s levels of democracy and foreign currency reserves level are both negatively linked to debt default risk, whereas default history, level of external debt, and short-term debt to reserves ratio are all significantly positively linked to higher default risk. The study suggests that certain countries may wish to evaluate their level of military spending to ensure it is not too high. Alternatively, countries may lower their accrual of external debt from military spending by focusing on domestic arms production, mitigating their risk that way.

Made in India: an aspiring brand in global arms bazaar

ABSTRACT With INR 107.45 billion ($1.54 billion) worth of arms exports and export authorisations in 2018–2019, India realised its biggest annual defence export ambition to date. Breaking into the world’s top 25 defence exporters for the first time, India has set its goal even higher, with a target of INR 300 billion ($5 billion) in defence exports by 2025. Can India achieve the goal and join the ranks of major arms exporting countries? What would it take for India to realise its defence export goal? And what has India done to achieve it? The paper examines India’s recent defence export performance and, in so doing, it probes various reform initiatives taken by the Indian government to promote international arms sales. The article argues that India has a significant domestic arms manufacturing capability, which, if harnessed properly, could propel the country as a significant player in the global arms bazaar.

Great Power Competition from the perspective of the United States of America at the beginning of the third decade of 21st century

In the area of security and defense, the turn of the second and third decade of the 21st century has been characterized by intensifying competition of economic and military powers. The United States of America competes with China and the Russian Federation in various fields of the functioning of states and international relations, aimed at shaping the security architecture as well as standards, practices and spheres of influence that will enable them to exercise hegemony over the widest possible area of the globe. As predicted, the ongoing competition over the next few decades will cause tensions not only on the Washington – Beijing and Washington – Moscow lines, but also in Africa, the Arctic, Europe as well as in cyberspace and space. The renewed rivalry between the great powers has officially reoriented the US security and defense priorities towards the need to prepare the country for increasing challenges. The leadership of the US Department of Defense made it a priority to prepare its armed forces for potential confrontation with other powers. This goal was the basis of all the military reforms carried out, the concept of its functioning, the modernization processes of military equipment, as well as the directions of technological research and development efforts of the domestic arms industry. According to all forecasts and analyses, in the long-term perspective these issues will be at the center of deliberations by politicians and expert circles.

PENGARUH ANGGARAN PERTAHANAN, IMPOR ALUTSISTA, EKSPOR ALUTSISTA, DAN INFLASI TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA TAHUN 1980-2019

Military and economy are two factors that can sustain the strength of a nation, where it can be seen from the nation's economic growth. Military indicators include military budget, arms imports, and arms exports. One of the economic indicators is inflation. These indicators are used in this study. The research problem is about the differences in results of research found in previous studies. The purpose of this study is to examine the effect of military indicators and economic indicators on economic growth. The study conducted in Indonesia using secondary data obtained from Stockholm International Peace Research Institute (SIPRI), World Bank, and Central Bureau of Statistics (BPS) of Republic of Indonesia. The research period is 40 years, from 1980 to 2019. The research method uses multiple linear regression. The results showed that military budget has significant effect on economic growth with positive relationship with probability value 0,01. Arms imports has significant effect on economic growth with positive relationship with probability value 0,03. Arms exports has no significant effect on economic growth with probability value 0,49. Inflation has a significant effect on economic growth with negative relationship with probability value 0,00. And simultaneously have significant effect on economic growth. In order to increase economic growth, it is necessary to has a military budget planning, planning for arms imports to be developed domestically, development of domestic arms technology to have competitive value, as well as planning the annual rate of inflation which will have an impact on increasing Indonesia's economic growth. Keywords: Arms Export, Arms Import, Economic Growth, Inflation, Military Budget

Odds for Arms? State Chance Game Participation in Turkey

ABSTRACT Net profits of state-run chance games are either earmarked for non-defence ‘good causes’ or added to the public purse in international practice. The Turkish case is unique as 95% of profits were earmarked for the extrabudgetary Defence Industry Support Fund (DISF) by legislation during 1986–2007. The DISF administers security equipment procurement and domestic arms production in Turkey. The earmarking practice was dissolved in 2007 and chance game profits are transferred to the general budget. The incomings of the DISF are from the budget and from earmarked taxes from 2007 onwards. The purpose of this paper is to investigate the effect of these practices on chance game sales for the period 1986–2017. Noting that a chance game is a joint public-private good, participation is motivated by expectations for private gain but at the same time loss is legitimised by expectations for provision of public services with the takeout part. In order to gain insight into the societal motives in chance game participation in Turkey our model is defined in the context of private (consumerism) cum public (security, warfare) interest. The VECM estimates support a long-run relationship between chance game sales and security variables.

Military-technical cooperation between Russia and Latin America at the present stage (cases of Venezuela, Peru, Brazil)

The article provides the overview of military-technical cooperation (MTC) of theRussian Federationwith Latin American countries, its main trends and impact on bilateral political and economic relations withVenezuela,PeruandBrazil. After the collapse of theUSSR, the supply of domestic arms to the Latin American market declined significantly. In the 2000s,Russiaregained its position in this market. Modern MTC strategies are primarily economic, marketing and political. The development of partnership in the field of military-technical cooperation is of long-term strategic importance, since the purchase of weapons entails the need for cooperation in other areas related to its use.

Arms production, national defense spending and arms trade: Examining supply and demand

Scholars have estimated demand functions for national defense spending and investigated international arms trade for a long time. The relationship between supply and demand for military goods has, however, only been examined on aggregate level or in formal models yet. I investigate how the supply of military goods by arms-producing companies and the demand for military goods by both the national government and foreign governments are related by using a panel of up to 195 arms-producing companies in 21 countries for the period 2002–2016. The results show that if the demand for national defense spending increases by 1%, the arms sales by a country’s largest arms-producing companies increase by up to 1.2%. If exports of major conventional weapons increase by 1%, sales increase by up to 0.2%. Arms imports do not affect domestic arms sales because imported and domestically produced arms are complements, and countries mainly import those arms they do not produce themselves. Country-specific estimation results suggest that differences among countries in geopolitical conditions and international relations determine whether a country’s arms industry serves economic rather than security purposes.

Filling arms production data gaps: South America as a case in point

In this article I argue that the data collection methods and procedures behind the Stockholm International Peace Research Institute’s (SIPRI) global arms trade database can also be used to approximate domestic purchases of local production of major conventional arms. The total output of domestic arms industries would then be the sum of what is domestically retained (procured) plus arms exports, if any. The feasibility of this idea is tested by presenting new data on domestic arms production for five South American countries (Argentina, Brazil, Chile, Colombia, and Venezuela) between 1960 and 2015. The results show the critical role government purchases play in maintaining domestic arms industries.

The effectiveness of Canada's navy on escort duty

This paper examines the potential costs a country faces when it fails to develop domestic arms manufacturing. I examine these costs using the historical example of Canada's decision to not develop domestic naval shipbuilding capacity prior to World War II. Canada's primary naval responsibility during the war was to escort convoys between the United Kingdom and North America. However its lack of advanced domestic shipbuilding capacity and congestion at Allied shipyards, meant that Canada could not obtain the relatively advanced destroyer class vessels necessary for convoy duty. Instead it had to rely on less advanced corvette class vessels, which were simple enough to be manufactured domestically. Using a unique data set, created for this project, I match convoy movements to German U-boat locations in order to examine the escort composition and the number of merchant ships lost when an engagement occurred. Using this data I find that destroyers were 2.14 more effective than corvettes at preventing the loss of a merchant ship. Then, by constructing a counterfactual scenario, I find that developing a domestic ship building industry in Canada would have netted the Allies a benefit of 28.7 million 1940 Canadian dollars.

„Abgedrehte Kupferwaren‟: Kriegsmaterialexporte der schweizerischen Uhren-, Metall- und Maschinenindustrie im Ersten Weltkrieg

Abstract During the First World War, warfare became more totalitarian and was backed by an economic conflict waged with increasingly harsh methods. In the combatant nations munitions rapidly became an essential “raw material”, with the increasing demand being met either by the expanding domestic arms industry or by munitions imports from neutral countries. The Swiss watch, metal and engineering industries enjoyed a strong international reputation and had a strong focus on exports: by the end of 1914 they began manufacturing precision detonators for artillery projectiles, and rising quantities of these products were sold to both sides. This paper examines what volume Swiss munitions exports assumed during the First World War, how this was compatible with Swiss neutrality and looks at the arguments used to criticise or justify this trade over the course of the war.

The Effectiveness of Canada's Navy on Escort Duty

This paper examines the potential costs a country faces when it fails to develop domestic arms manufacturing. I examine these costs using the historical example of Canada's decision to not develop domestic naval shipbuilding capacity prior to World War II. Canada's primary naval responsibility during the war was to escort convoys between the United Kingdom and North America. However its lack of advanced domestic shipbuilding capacity and congestion at Allied shipyards, meant that Canada could not obtain the relatively advanced destroyer class vessels necessary for convoy duty. Instead it had to rely on less advanced corvette class vessels, which were simple enough to be manufactured domestically. Using a unique data set, created for this project, I match convoy movements to German U-boat locations in order to examine the escort composition and the number of merchant ships lost when an engagement occurred. Using this data I find that destroyers were 2.14 more effective than corvettes at preventing the loss of a merchant ship. Then, by constructing a counterfactual scenario, I find that developing a domestic ship building industry in Canada would have netted the Allies a benefit of 28.7 million 1940 Canadian dollars.

The Way of the Gun: Estimating Firearms Trafficking across the US–Mexico Border

The volume of firearms sold in USA and trafficked across the US-Mexico border is notoriously difficult to estimate. We consider a unique approach using GIS-generated county-level panel data (1993-1999 and 2010-2012) of Federal Firearms Licenses to sell small arms (FFLs) to estimate the realized demand for firearms based on the distance by road from the nearest point on the US-Mexico border. We use a time-series negative binomial model paired with a post-estimation population attributable fraction (PAF) estimator. We do so to control determinants of domestic demand. We are able to estimate a total demand for trafficking, both in terms of firearms and dollar sales for the firearms industry. We find that nearly 2.2% (between 0.9% and 3.7%) of US domestic arms sales are attributable to the US-Mexico traffic in the period 2010-2012, representing 212,887 firearms (between 89,816 and 359,205) purchased annually to be trafficked. Language: en

The Arms Trade: No Cause for a Treaty

The United States has a very developed arms export regime that controls U.S. sales to foreign states as well as U.S. companies’ sales to foreign states. Furthermore, the U.S. actively promotes the development of similar regimes in other states through a voluntary agreement designed to improve practices as well as regional agreements. Despite the existence of regional arms control agreements, several states, scholars, and NGOs have pushed for an Arms Trade Treaty (ATT). Such a treaty, proponents argue, could help reduce the amount of exported arms used to commit human rights abuses and other violations of international law. Yet, at the same time, one might doubt the strong necessity for a grand UN Conference on the Arms Trade Treaty (planned for 2012) and an accompanying treaty that might do little to address the most severe problems of arms transfer. Control Arms Campaign, a strong proponent of the ATT, completed a study chronicling the movement of arms in ways that evade domestic and regional arms control policies. It is unclear whether the proposed ATT would address many of the common evasion practices. Another strong concern is the “re-export” or “retransfer” of arms to a third party even after a legal sale (under domestic and/or international law) is made to a main party. This paper will explore the extent to which current arms trade treaties, as well as the proposed ATT, address the most prevalent challenges in controlling the arms trade. Part II will briefly review the existing state of the global arms trade and then examine current international, regional, and state practices on arms control of conventional weaponry. Part III will analyze the developments toward an Arms Trade Treaty, hypothesize the form such a treaty might take, and assess the likely impact of an ATT on the arms trade. I will suggest that, while the ideal is noble, the proposed ATT does not appear to go much further than existing agreements in curbing the multi-billion dollar arms trade. While the ATT may bring more structure and mandatory reporting to such existing regimes as the Wassenaar Arrangement, the ATT would likely be joined mostly by those states that already have robust arms control regimes. There do not appear to be great incentives to states that currently remain indifferent to the negative consequences of arms flow to corrupt leaders, criminals, and terrorists. Ultimately, an ATT would not appear to have the ability to overhaul the existing practices in arms export throughout the world. Furthermore, although one could certainly approach the potential treaty by analyzing the political realities of ratification – e.g. substantial domestic opposition within the U.S. to ratification – such analysis is outside the scope of this paper. Rather, this paper will limit itself to analysis of the merits of the ATT and how it would affect the arms trade even without substantial ratification issues in such major arms exporters as the U.S., Russia, and China.

Random coefficients models of arms imports

This paper uses a large panel of data with up to 19 time-series observations for almost 150 countries to estimate models of arms imports. Qualitative evidence suggests a non-linear relationship. As income and military expenditure grow, the propensity to import first rises and then falls as a domestic arms industry develops. We face the difficulty that there is virtually no data on domestic arms procurement or production capability. We respond to this difficulty by adopting a random coefficient approach in order to identify any systematic influences on import propensity, through the impact of military expenditure, size of the armed forces or income on unobserved domestic production capability. While a clear non-linear pattern is apparent in the cross-section relationship, once one allows for parameter heterogeneity such a pattern is not apparent in the time-series.

The Demand for Arms Imports

This article presents estimates of demand functions for arms imports for a panel of 52 countries, 1981–99, where there are non-zero observations for both the main measures, WMEAT and SIPRI. In principle, the WMEAT series is a value measure, while the SIPRI series is a volume measure, thus the ratio is a proxy for price. A baseline static log-linear model that makes arms imports a function of this proxy for price, military expenditure and per capita income, is estimated in a variety of ways. This shows significant price effects, with an elasticity around minus one; significant military expenditure effects with an elasticity below one; and no systematic effect of per capita income, though there is some suggestion that richer countries import less for the same level of military expenditure. Thus, there seems to be a relatively well-defined demand function of the form that has been assumed in much of the theoretical work. The article then examines the effects on the results of: measurement error in the proxy for price; choice of estimator; non-linearity; dynamic specification; and possible endogeneity of prices. In general, the results seem robust, though in cross-section there is a non-linearity – arms imports appear to rise and then fall as military expenditure increases – which is not apparent in time-series. The cross-section non-linearity may reflect the long-run effects of the development of domestic arms production capability on imports. However, because good data on arms production capability are not available, this explanation cannot be evaluated. Finally, the article reviews a range of potential criticisms of this approach, and areas for further research are also reviewed.

Many Things Forgotten: The Use of Probate Records in "Arming America"

people did not own guns before the middle of the nineteenth century because guns had been too expensive, unreliable, and not all that useful.1 The advent of mass production and aggressive advertizing by domestic arms manufacturers, Bellesiles argues, boosted the levels of ownership, contributed to rising rates of interpersonal violence among white men, and created a national gun culture centered on the possession and display of firearms. Much of the book discusses the manufacture and tactical use of guns wartime, the manifold shortcomings of state militia systems, and the perennial shortage of their equipment, but the heart of the matter is what proportion of the people possessed guns early America. Bellesiles replies, Not many. His estimates, only 15 percent before 1790 and just 21 percent 1830, run strongly counter to folk images of our pioneer past (Table I, p. 445). Although he cites censuses of various kinds, it is the alleged absence of guns from probate records that provides his clincher. If arms of any kind are not mentioned inventories or wills, he argues, the odds are high that they were not there at all. Probate inventories, he says, scrupulously recorded item an estate . . . including those that had already been passed on as bequests before death (p. Io9, restated at length on p. 266). This is nonsense. Anyone at all familiar with inventories from the colonial period knows that they are maddeningly inconsistent organization and detail. They almost always contain escape phrases such as in small things forgotten or lumber, which could mean anything that happened not to interest the appraisers. Nor do inventories include every item. Custom, not law, excluded pets-even prized hunting dogs-and children's toys (unless the children were deceased) and the widow's paraphernalia, a vague and contested term. Worse, appraisers often lumped things

Country survey XII: South Africa

This article examines the relationship between defence expenditure and economic performance in South Africa, both prior to and after that country's first fully democratic election in 1994. Prior to 1994 defence expenditure decisions were largely dominated by non‐economic factors; since then defence spending has declined in reaction to, inter alia, the need to address a number of socio‐economic inequities. After 1975 in particular, military industrialisation in South Africa placed a disproportionately high burden on the country's industrial resources and natural economic and technical capabilities. However, although this suggests that the opportunity cost of domestic arms production has been fairly high, the country's poor economic and development performance since the mid‐1970s is a function of underlying structural deficiencies and institutional constraints rather than the consequence of inordinately high defence spending levels.

Price competition in a model of arms trade*

This paper presents a model of subsidized military production that examines the relationship between domestic procurement and arms exports. Weapon producers satisfy the defence procurement in their own country and compete in prices in the international market where weapons are imperfect substitutes for each other. Importers are involved in an arms race situation and do not have domestic military production. The model makes explicit the strategic interaction between governments and firms in the export market. We then analyze the effect of a change in the most significant parameters on the equilibrium. The paper suggests an explanation for the evolution of the arms market in the past few years and highlights the important role of the demand and cost structures.

What future for Russian arms exports?

Russia’s arms industry is slowly recovering from the collapse of the Soviet Union. It has gained new markets in Asia and Latin America, but lost many of its traditional customers in Eastern Europe and Africa. But in its haste to secure new orders from countries like China, India, Indonesia, Iran, Malaysia and South Korea, Russian arms manufacturers are increasingly selling top-of-the-range items, in some cases equipment that is not even available to the Russian armed forces. With the collapse of Russia’s domestic arms market, the need for exports may push the government and weapons companies into dubious deals. In the long term, restructuring the industry is the only cure for its economic woes.

Effects of Anticipated Foreign Military Threat on Arms Accumulation

The literature of competitive arms accumulation based on the intertemporal optimization model has in recent years received considerable attention. For example, some models study the strategic aspects of arms accumulation in a dynamic game [1; 11; 6; 14; 15],' others examine the economic effect of consumption, military spending, and arms accumulation in the presence of a foreign threat [5; 6]. However, these studies focus their attention on the stability, the steady-state effect, and the short-run adjustment of military spending and the domestic arms stock following an unanticipated permanent rise in the foreign military threat.2 It seems that very few efforts have been made to analyze the effects of an anticipated foreign military threat on the defense spending and home weapon stock. As a consequence, the first purpose of this paper is to contribute to the literature of competitive arms accumulation through examining the impact of an anticipated foreign threat. There are several examples motivated for such a study. The Middle East is a case in point. Kuwait and Saudi Arabia face the anticipated military threat from Iraq since the outbreak of the Gulf War in 1991. Recently, the peace talk between Israel and Arabs is often held, which makes their people anticipate that the enmity between both sides may be lessened and that the military conflicts in the Middle East may be lowered in the future. The South Asia is another case in point. As India insists on developing their nuclear weapons, the public in Pakistan anticipate that the military threat will be increased and hence will engage in an arms race action. Most studies on military spending use two alternative specifications in the utility function. Brito [1], Simaan and Cruz [11], Deger and Sen [5; 6] assume that the utility function is nonsepara-