Military Expenditures and Political Regimes: An Analysis Using Global Data, 1963-2001

This paper examines the determinants of military expenditures with a special focus on political regimes for more than 130 countries for the period of 1963-2001 by employing a dynamic panel data analysis. The paper aims at contributing to the literature by utilizing a recently constructed political regimes data set and considering income inequality, a key variable that has not received substantial attention in the context of political regimes, growth and military expenditures. Covering a large set of countries and an extended time period, the paper reveals further evidence on the linkage between democracy and military expenditures. Our results yield two crucial facts. First, social democratic political regimes have a tendency to spend less on armaments as a share of the national income; compared to social democracy all other political regimes are likely to have higher military burdens, confirming previous findings of the negative relationship between level of democracy and military burden. Second, the analysis shows that higher income inequality, regardless of the model specification and inequality measure, is associated with lower military burden.