Abstract
Economics of Peace and Security Journal, January 2006, EPS.
“If you want peace, prepare for war,” advised the Roman military theorist Flavius Vegetius Renatus. Yet, some economists would beg to differ, noting that military spending diverts resources from development–and in doing so, perpetuates the cycle of civil strife and conflict.
Such is the underlying theme of the inaugural issue of the Economics of Peace and Security journal. With a nod toward such luminaries as John Maynard Keynes, Joseph A. Schumpeter, and Adam Smith, the journal's editors note in their introduction that, “It is little known, and therefore little appreciated, that economists have a long-standing history in making significant contributions to the analysis of security issues.” Their goal is to “communicate to non-economists, in non-technical language, what and how economists think about security issues” and, where possible, to offer advice on conflict resolution.
One of the showcase authors in the journal's premiere issue is Paul Collier, formerly a prominent World Bank economist who now teaches at Oxford. His article, “War and Military Expenditure in Developing Countries and Their Consequences for Development,” considers the question of why governments in poor countries persist in high levels of military spending when it so clearly retards their economic growth. A primary reason, he concludes, is not fear of external attack, but rather concerns over internal rebellion. “This precautionary spending is considerable: A government of a country with say a 30 percent risk of civil war during the coming five years would raise its spending by around 1.2 percent of GDP [gross domestic product] relative to an otherwise identical country without such a risk.”
Another factor is the age-old question, cui bono? (Who benefits?) In wealthy countries, defense industries tend to reap a hefty share of military spending. Not so in developing nations, where military hardware is typically imported. Under such circumstances, Collier says, the domestic beneficiaries are predominately military employees. As such, dictatorships dominated by military officials tend to have higher defense expenditures than democratic nations–an additional 2 percent of GDP.
Problematically, when one developing nation raises its military spending, neighboring countries follow suit. In part, that's because nearby countries see higher spending as a sign of hostile intentions. But Collier also speculates it's a matter of keeping up with the Joneses: “If the neighbors are spending a particular share of national income on defense, then the chiefs of the military, or the minister of defense, have a relatively easy case to argue with the minister of finance, that their own country should spend approximately at the same level.”
Collier advocates a solution that borrows a page from arms control treaties–a multilateral agreement whereby countries in the region agree to mutually slash their defense spending. International aid donors could play a role in enforcing the agreement, by making the flow of funds conditional on countries' adherence. For the conflict-ridden nations of the developing world, that would indeed be money well-spent.