THE DEMAND FOR MILITARY SPENDING IN THE PERIPHERAL ECONOMIES OF EUROPE

Paul DUNNE (Middlesex University Business School)
Eftychia NIKOLAIDOU (City Liberal Studies, Affiliated College of the University of Sheffield)
Nikolaos MYLONIDIS (University of Ioannina)

Considerable research effort has been put into attempting to understand the factors that determine the level of military expenditure or military burden in countries. The findings have led to suggestions that the dynamics of the determinants of military spending will be best understood by case studies of individual countries and studies of groups of relatively homogeneous countries. This paper contributes to the literature by considering three of the EU's peripheral economies - Greece, Portugal and Spain. This article provides an analysis of the three countries' experience, a particularly valuable comparative study, given the importance of the military sector to the three countries during the military governments (and the perceived Turkish threat for Greece), the quite marked reductions in military spending after the end of the cold war and the availability of good time series data. A detailed analysis of the trends in military spending and the changing structure of government spending over the last forty years is undertaken. A simple model based on a general theory of the demand for military spending, provides the basis for an investigation of the relative importance of strategic and other social and economic factors and is found to perform surprisingly well.