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Convergence or Divergence Patterns in Global Defence Spending: Further Evidence from a Nonlinear Single Factor Model

Saba Charles Shaaba ()
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Saba Charles Shaaba: School of Economics, College of Business and Economics, University of Johannesburg, Auckland Park Kingsway Campus, P.O. Box 524, Auckland Park, Johannesburg, South Africa

Peace Economics, Peace Science, and Public Policy, 2021, vol. 27, issue 1, 51-90

Abstract: This study re-examines the international convergence in defence spending for 125 countries spanning 1985–2018. We employ the approach of Phillips and Sul, which tests for the existence of convergence clubs and the modelling of different transition paths to convergence. Our findings suggest no overall defence spending convergence at the world, income groups (except the low-income countries) and regional levels. However, we identify two convergence clubs using an iterative testing procedure and eventually (i) at world level, these two clubs exhibit convergence, and (ii) while taking into account Gross national income, geography and defence alliances/economic cooperation it is possible to make different number of convergence/divergence clubs. Contrary to previous findings, this study finds that the process of convergence in defence spending does not reflect the desirable emanations of defence policies sharing similar characteristics, at least in terms of the allocation of scarce public resources across the globe.

Keywords: defence spending; club merging; convergence club; log t regression test (search for similar items in EconPapers)
JEL-codes: H56 O50 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/peps-2020-0012

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