Global Arms Trade and Oil Dependence

Vincenzo Bove, Claudio Deiana () and Roberto Nistic�
Authors registered in the RePEc Author Service: Roberto Nisticò ()

The Journal of Law, Economics, and Organization, 2018, vol. 34, issue 2, 272-299

Abstract: We investigate how oil dependence affects the trade of weapons between countries. We argue that oil-dependent economies have incentives to transfer arms to oil-rich countries to reduce their risk of instability and, as a result, the chances of disruption in the oil industry. We employ gravity models of the arms trade and estimate the effect of both a local as well as a global oil dependence. Two key results emerge. First, the volume of arms transfers to a specific country is affected by the degree of dependence on its supply of oil. Second, global oil dependence motivates arms export to oil-rich countries even in absence of a direct bilateral oil-for-weapons exchange. Our results point consistently toward the conclusion that the arms trade is an effective foreign policy tool to securing and maintaining access to oil.

JEL-codes: F10 F50 H56 Q34 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (18)

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