Alliances as Contiguity in Spatial Models of Military Expenditures

What determines the level of a country?s military expenditures? Both history and theory indicate that military expenditures are strategic in nature?a country?s military expenditures depend on the military allocations of other countries. This article examines two potential sources of interdependence: geographic proximity and alliance membership. Estimation results from spatial autoregressive models show that a country?s military expenditures are positively correlated with those of its geographic neighbors. Since countries may respond positively to their neighbors? military spending due to conflict or cooperation, the article uses alliance membership as an alternative measure of contiguity to discover potential cooperative relationships among geographic neighbors. Results indicate that a country?s military expenditures are positively correlated with the military spending of its alliance partners. This correlation is stronger between members of the same defensive alliance.