NATO defense demand, free riding, and the Russo-Ukrainian war in 2022

Justin George () and Todd Sandler
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Justin George: Michigan State University

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2022, vol. 49, issue 4, No 7, 783-806

Abstract: Abstract The article applies the economic theory of alliances to uncover military expenditure burden sharing in the North Atlantic Treaty Organization (NATO) during 1991–2020, prior to Russia’s invasion of Ukraine in February 2022. In so doing, our analysis accounts for the relative locations of NATO allies through various spatial or economic weights applied to the allies’ defense spending. Such weights include NATO membership status, contiguity, US power projection, inverse distance between members’ capitals, economic trade, and contiguity to Russia. In the post-Cold War era, we uncover allies’ free riding on the aggregate military expenditure of other allies. Free riding also included reliance on the defense spending of NATO allies in proximity to Russia. Surprisingly, NATO allies reduced their defense spending as Russia increased its defense spending. The pattern of free riding and lack of response to heightened Russian defense spending likely encouraged the Russian invasion as NATO appeared divided.

Keywords: Russo-Ukrainian war of 2022; NATO defense spending; Economics of alliances; Free riding; Spatial econometrics (search for similar items in EconPapers)
JEL-codes: C21 D74 H56 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s40812-022-00228-y

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