Arms races in the developing world: Some policy implications

An arms race exists when a country's propensity to acquire arms is influenced by a potential adversary's military spending. When evaluating the impact of economic policies towards the developing world, e.g., foreign assistance programs, it is important to identify if an arms race exist between dyads of recipient nations. The reason is that if the impact of the policy is favorable to the country deemed to be "causing" an arms race, then the policy will not only increase the amount of weapons of the recipient country, but of the other as well. This will increase the probability of war if it is positively related to the stock of weapons of these adversaries. Consequently, this paper investigates the direction of prima facie casual relationship between the military expenditures of potential adversaries in the developing world by using parametric causality tests. We conclude that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore seem to be governed by other than an external threat.