The Effect of Declining Military Influence on Defense Budgets in Latin America
Abstract
While military governments have often been a tradition in many
Latin American countries. a relatively small and stable amount of
national resources is traditionally allocated to national defense.
Most of the recent studies on the determinants of defense in this
region of the world have employed data only through the midl
980s. Since then sweeping economic and political changes have
taken place especially in Latin America. This paper examines the
factors which have influenced Latin American defense allocations
for fifteen countries in the 1980s to the mid- l 990s. We
suggest that a long-run relationship exists between defense expenditures
and other variables such as GNP and employ a technique
to decompose year to year movements in the defense burden
into two components: the component associated with shortrun
factors and the component associated with correcting the
deviation in the defense burden from the long-run pattern. Factors
such as the military·s influence. and changes in regional
military expenditures are examined. Our results suggest that for
most of the fifteen countries a high proportion of the defense burden can be explained by a relatively small number of variables.
For six countries, no long-run trend was identified and
defense expenditures are determined by short-run shocks. For the
other nine countries, equilibrating corrections are made to the
defense budget in response to short-run shocks.
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