Defense expenditure and economic growth under external predation

Abstract

This chapter develops a growth model of a country under a Hobbesian environment with international conflicts in which national defense is the only way to prevent external predation. The long run growth path is determined by the equilibrium of a dynamic game with three players: the external predator, the government, and the family. The equilibrium growth path has three phases: submissive equilibrium, tolerant equilibrium, and full-protected equilibrium. Different defense strategies result in different growth prospects, and sustainable growth will endogenously induce adjustment of defense strategies.

Citation

Taoxiong, L. and Angang, H. (2013), "Defense expenditure and economic growth under external predation", Cooperation for a Peaceful and Sustainable World Part 2 (Contributions to Conflict Management, Peace Economics and Development, Vol. 20 Part 2), Emerald Group Publishing Limited, Leeds, pp. 39-63. https://doi.org/10.1108/S1572-8323(2013)00020.2007