More than thirty years of research on the positive or negative consequences of various military activities for the civilian sector has failed to yield strong and unambiguous evidence one way or the other. This article briefly describes the history of this gunsversus-butter controversy, noting the close relationship between U.S. policy needs and the response of the research community. The article then focuses on the debate over the role that arms transfers, military assistance, and defense industries play in Third World economic growth and development. Finally, it assesses the relevance of the debate for today's post-Cold War world.
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References
1.
1. In the Third World there was an absence of official statistics prior to the 1950s, in part because many states were only newly independent. V. Bulmer-Thomas, “Economic Development over the Long Run: Central America since 1920,”Journal of Latin American Studies, 15:269 (Nov. 1983)
2.
2. U.S., Arms Control and Disarmament Agency, World Military Expenditures and Arms Trade, 1963-1973 (Washington, DC: Government Printing Office, 1975).
3.
3. The Fulbright-Hayes Act of 1961, for example, was designed to promote teaching and professional research in other countries by U.S. scholars and improve their knowledge of foreign languages and cultures.
4.
4. J. J. Johnson, ed., The Role of the Military in Underdeveloped Countries (Princeton, NJ: Princeton University Press, 1962).
5.
5. Emile Benoit, Defense and Economic Growth in Developing Countries (Lexington, MA: Lexington Books, 1973).
6.
idem, World Military Expenditures and Arms Transfers, 1972-82 (Washington, DC: Government Printing Office, 1984).
7.
7. Gavin Kennedy, personal conversation, Washington, DC, 1987.
8.
8. The political realists viewed sovereign nation-states as rational, unitary actors pursuing national interests, regardless of their form of government or type of economic organization. In a self-help, anarchic international system, they maintained, weapons are necessary tools in the struggle to survive and to achieve order and stability. Order is a precondition for economic development, but development is ultimately decided by domestic capabilities and resources. Inequalities between states are an inevitable byproduct of the uneven distribution of these resources and capabilities. Dependency theorists, like the realists, regard states as the primary actors in the world, but they see them as representing class rather than national interests. From this perspective, states are not unitary but stratified actors. Classes form across state borders and compete for control within countries and among them. Governments pursue not an abstract national interest but the economic and political interests of a dominant class or classes. Arms represent an instrument of repression whereby the weak are subordinated to the strong. The world system is dominated by capitalism. Underdevelopment is seen as a by-product of that system, although scholars differ over the relative importance of domestic versus external forces. To achieve development and greater equality, they contend, the domestic or international status quo needs to change.
9.
Erich Weede , “Military Participation Ratios, Human Capital Formation, and Economic Growth: A Cross-National Analysis,”Journal of Political and Military Sociology, 11:11-19 (Spring 1983).
10.
10. In this connection, the term “opportunity costs” refers to the cost of using resources for defense purposes, measured by the benefits given up by not putting them to their best alternative use in the civilian sector.
11.
11. United Nations, Department for Disarmament Affairs, Economic and Social Consequences of the Arms Race and of Military Expenditures (New York: United Nations, 1983), p. 23.
12.
12. Saadet Deger, Military Expenditure in Third World Countries: The Economic Effects (Boston, MA: Routledge & Kegan Paul, 1986), pp. 121, 246.
13.
See also Nicole Ball, Security and Economy in the Third World (Princeton, NJ: Princeton University Press, 1988), app. 1.
14.
14. Whynes, Third World Military Expenditure, pp. 96-97.
15.
15. Ibid., p. 97.
16.
16. Robert S. McNamara, “The Post-Cold War World: Implications for Military Expenditure in the Developing Countries,” in Proceedings of the World Bank Annual Conference on Development Economics 1991 (Washington, DC: International Bank for Reconstruction and Development, World Bank, 1992) p. 107.
17.
Michael Klare , “Militarism: The Issues Today,” in Problems of Contemporary Militarism, ed. Asbjorn Eide and Marek Thee (London: Croom-Helm, 1980), p. 39.
18.
18. United Nations, Department for Disarmament Affairs, Economic and Social Consequences, p. 63.
19.
19. Ball, Security and Economy in the Third World, pp. 292-294.
20.
20. Benoit, for example, acknowledged that defense spending reduces civilian production and “crowds out” civilian investment, but, he concluded, the negative effects are offset by other positive “spin-offs.”Benoit, Defense and Economic Growth, p. xxi.
21.
21. Whynes, Third World Military Expenditure, p. 94.
22.
See also Stephanie Neuman, “Security, Military Expenditures, and Socioeconomic Development: Reflections on Iran,”Orbis, 22(3):588-589 (Fall 1978).
23.
23. For a more detailed articulation of this position, see Sivard, World Military Expenditures, 1989, p. 10.
24.
24. George H. Quester, “Predicting the Impact of Third World Weapons Spread” (Paper delivered at the conference “Implications of a Changing Third World Military Environment,”Washington, DC, 25-26 July, 1989), p. 5.
25.
25. Ibid., p. 10.
26.
26. Ibid., p. 13.
27.
27. An offset program is designed to reduce hard-currency payments for imports through barter, trade, investment by the supplier in the local economy, partial domestic production of the item to be purchased, preferential trade contracts, or increased access to the supplier's commercial market. For a detailed description of different kinds of offset arrangements, see S. Neuman, “Coproduction, Barter, and Countertrade: Offsets in the International Arms Market,”Orbis, 29(1) (Spring 1985).
28.
28. Gilbert Nockles and Alan Spence, Offset: Securing Competitive Advantage and Economic Development in the 1990s (London: FT Business Information, 1987), pp. 17-22.
29.
29. “Foreign Press Reports” (American League for Exports and Security Assistance), mimeographed, 11 Jan. 1993, p. 2.
30.
30. Hong Kong AFP, 9 Mar. 1993.
31.
31. Reuters Wire Service, 29 Apr. 1992.
32.
32. India's National Aerospace Laboratories, for example, has signed an agreement with a Russian firm to design and produce a 14-seat light-transport aircraft to be used in both countries. Foreign Press Reports, 16 Feb. 1994.
33.
33. Reuters Wire Service, 29 Apr. 1992.
34.
34. Robert Picciotto, “Comment on `The Post-Cold War World: Implications for Military Expenditure in the Developing Countries,' by McNamara,” in Proceedings of the World Bank Conference 1991, p. 134.
35.
35. For example, aid to Central America from the United States, with the exception of a $420 million aid package to Panama in 1992, is down. The 1992 allocation of $86 million in economic aid to Honduras is the lowest to that country in 10 years, with the exception of 1989, when aid was frozen over economic policy. Military aid for 1992 came to $6.2 million, a small fraction of the over $80 million Honduras received in the mid-1980s. Lee Hockstader, “Honduras Embattled after Decade of Aid,”Washington Post, 13 July 1992.
36.
36. Andrew Hurrell, “Latin America in the New World Order: A Regional Bloc of the Americas?”International Affairs, 68(1):124 (1992).
37.
37. Francois Heisbourg found that the price indexes of arms, aerospace, and shipbuilding in comparison to other categories of manufactured goods were 26 to 90 percentage points higher. Francois Heisbourg, “Public Policy and the Creation of a European Arms Market,” in European Armaments Market and Procurement Cooperation, ed. Pauline Creasey and Simon May (London: Macmillan, 1988), p. 61.
38.
38. U.S., Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers, 1991-1992 (Washington, DC: Government Printing Office, 1994).
39.
See also Saadet Deger and Ron Smith, “Military Expenditures and Growth in Less Developed Countries,”Journal of Conflict Resolution, 27:346-348 (June 1983).
40.
40. Nicole Ball, “The Political Economy of Defense Industrialization in the Third World,” in The Political Economy of Defense: Issues and Perspectives, ed. Andrew L. Ross (Westport, CT: Greenwood Press, 1991), pp. 175-201.
41.
41. Ibid., p. 190.
42.
Sivard , World Military Expenditures, 1989, p. 30.
43.
43. Robert E. Looney and Peter C. Frederiksen, “Impact of Latin American Arms Production on Economic Performance,”Journal of Economic, Social, and Political Studies, 12:309-320 (Fall 1987).
44.
44. Neuman, “Security, Military Expenditures, and Socioeconomic Development.”
45.
quoted in Ball, “Defense Industrialization in the Third World,” p. 182.
46.
46. Jurgen Brauer, “Military Investments and Economic Growth in Developing Nations,”Economic Development and Cultural Change, 39:884 (July 1991).
47.
Brauer , “Military Investments,” p. 882.
48.
48. Brauer, “Military Investments,” p. 881.
49.
49. Gupta, “Third World Militaries,” pp. 67-68.
50.
50. George Tanham, for example, believes that the Chinese-Indian border war provided the impetus for self-sufficiency in weapons production for India. “Indian history had revealed all too clearly that Indian dependence on inferior weapons was disastrous.” George Tanham, “Indian Strategic Culture,”Washington Quarterly, p. 140 (Winter 1992).
51.
cited in Ian Anthony, “The Conventional Arms Trade in the 1990s,” in Cascade of Arms: Controlling Conventional Weapons Proliferation in the 1990s, ed. Andrew J. Pierre (Washington, DC: Brookings Institution, 1994).
52.
cited in Anthony, “Conventional Arms Trade.”
53.
53. Keith Krause, “Trends in the Production and Trade of Conventional Weapons” (Paper prepared for the conference “The Supply-Side Control of Weapons Proliferation,”Canadian Institute for International Peace and Security, Ottawa, Ontario, Canada, June 1991), pp. 6-7.
54.
54. Anthony, “Conventional Arms Trade.”
55.
55. Ethan B. Kapstein, “Conclusions and Policy Recommendations,” in Global Arms Production: Policy Dilemmas for the 1990s, ed. Ethan B. Kapstein (Lanham, MD: University Press of America, 1992), p. 240.
56.
56. Raimo Väyrynen, Military Industrialization and Economic Development: Theory and Historical Case Studies (New York: United Nations Institute for Disarmament Research; Hampshire, England: Dartmouth, 1992), p. 100.
57.
57. China, India, Israel, South Africa, Brazil, Taiwan, North Korea, Argentina, South Korea, Egypt, countries of the Association of Southeast Asian Nations (Indonesia, Malaysia, Thailand, the Philippines, Singapore), and others (Bangladesh, Burma, Chile, Colombia, the Dominican Republic, Gabon, Madagascar, Mexico, Pakistan, Peru, Senegal, Sri Lanka). The countries are listed in rank order based on data from the Stockholm International Peace Research Institute (SIPRI). See Michael Brzoska and Thomas Ohlson, eds., Arms Production in the Third World (London: Taylor & Francis, 1986), p. 10. I added China to the list. SIPRI does not include China as a Third World country and so it is not included in the Brzoska and Ohlson data.
58.
58. Apparently, only an aircraft-producing firm, once part of the old Soviet military industrial complex, is still functioning. “Foreign Press Reports,” 11 Jan. 1992, p. 9.
59.
59. Antoaneta Dimitrova, “The Plight of the Bulgarian Arms Industry,”REF/RL Research Report, 12 Feb. 1993, p. 52.
60.
60. Ibid., p. 53.
61.
61. Gupta, “Third World Militaries,” pp. 62-63.
62.
62. Väyrynen, Military Industrialization and Economic Development, p. 101.
63.
63. “Defense Spending and Economic Growth in Developing Countries,” in Defense Spending and Economic Growth, ed. James E. Payne and Anandi P. Sahu (Boulder, CO: Westview Press, 1993), pp. 225, 230.
64.
64. See Steve Chan, “The Political Economy of Military Spending and Economic Performance: Directions for Future Research,” in Political Economy of Defense, ed. Ross, pp. 204-222.
65.
65. Davis B. Bobrow, “Eating Your Cake and Having It Too: The Japanese Case,” in Defense, Welfare, and Growth, ed. Steve Chan and Alex Mintz (New York: Routledge, 1992), pp. 81-98.
66.
66. Keith Krause, “Arms Imports, Arms Production, and the Quest for Security in the Third World,” in The Insecurity Dilemma: National Security of Third World States, ed. Brian L. Job (Boulder, CO: Lynne Rienner, 1992), pp. 141-142.
67.
67. “Security, Military Expenditures, and Socioeconomic Development,” p. 592.
68.
68. For an important exception, see Steve Chan, “Defense Burden and Economic Growth: Unravelling the Taiwanese Enigma,”American Polit- ical Science Review, 82(3):913-920 (Sept. 1988).
69.
Steve Chan, “Defense, Welfare, and Growth: Introduction,” in ibid., pp. 1-20.
