Military Expenditures and Free-Riding in NATO

Abstract

AbstractChanges in the security environment after the Cold War and decreasing number of armed conflicts in NATO member states lead these countries to a gradual reduction in military expenditure. However, new security threats that these countries faced at the beginning of the 21st century brought a massive growth of military expenditure especially in the USA which lead to significant deepening of disparities between the USA and European NATO member states. The aim of the article is to investigate disproportionality of burden sharing among 28 NATO members and via multidimensional statistic methods identify free-riding in Alliances. A model based on theory of the demand for military spending provides the basis for an investigation of the disparities (identified especially in the characteristics of the economic and security environment) in determinants influencing military expenditure. Finding suggest that the Alliance is not mainly an economically homogenous body and individual economies thus allocate a significantly different amount of GDP for the needs of the armed forces in dependence on political priorities of individual governments, public finances or overall economic condition of national economies. However, the results of the classification model reveal the fact that group of countries identified as core states of the “traditional” NATO member states (with above-average values of variables) do not allocate the long-term recommended amount of military expenditure of 2% of GDP. These countries are suspected of dangerous free-riding.