Military Alliances and Reality of Regional Integration: Japan, South Korea, the US vs. China, North Korea

Young-Wan Goo () and Seong-Hoon Lee ()
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Young-Wan Goo: Department of Economics, Chungbuk National University, Postal: 410 Seongbong-ro, Cheongju, Chungbuk, 361-763, South Korea
Seong-Hoon Lee: Department of Economics, Cheongju University, Postal: 298 Dasung-ro, Cheongju, South Korea

Journal of Economic Integration, 2014, vol. 29, 329-342

Abstract: East Asian military security is of overarching importance in the economic integration and prosperity in this region. This study analyzes how South Korea and Japan consider the U.S. as a military ally in the context of the China–North Korea alliance by using the iterative Seemingly Unrelated Regression(SUR) method in estimating defense goods demand functions. The findings are that Japan considered the U.S. to be a closer ally than the U.S. did during 2000~2005 and South Korea may regard the U.S. as a closer ally than vice versa. The U.S. regards Japan as a closer ally than Korea. South Korea’s demand for defense goods has not been increased by the threat from the China–North Korea alliance but American and Japanese demand has recently been increased by the threat, implying that South Korea has not regarded the China–North Korea alliance as a significant threat whereas that Japan and the U.S. have recognized the military alliance as a serious one.

Keywords: Military Alliance; Defense Goods; Threat Elasticity; Spill-In Elasticity (SIE); Public Good (search for similar items in EconPapers)
JEL-codes: H41 H56 O53 (search for similar items in EconPapers)
Date: 2014
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