The Effect of Declining Military Influence on Defense Budgets in Latin America

Abstract

While military governments have often been a tradition in many Latin American countries, a relatively small and stable number of national resources are traditionally allocated to national defense. Recent studies on the determinants of defense spending in this region have employed data only through the mid-1980s. Since then, sweeping economic and political changes have occurred in the region. This article examines the factors influencing Latin American defense allocations for fifteen countries in the 1980s to the mid-1990s. We posit a long-term relationship between defense and other variables (such as GNP), and employ a technique to separate year to year movements in the defense burden into components associated with (a) short-run factors and (b) the correction of the deviation from the long-run pattern. Factors such as military influence and changes in regional defense expenditures are examined. The results suggest that for most of the 15 countries, a high proportion of the defense burden is explained by relatively few variables. For six countries, no long-run trend was identified and defense expenditures are determined by short-run shocks. For the other nine countries, equilibrating corrections are made to the defense budget in response to short-run shocks.